FRANKLIN LAKES, N.J. - BD (Becton, Dickinson and Company) (NYSE: BDX), a prominent global medical technology firm, has announced the acquisition of Edwards Lifesciences’ Critical Care division for $4.2 billion in cash. The transaction is set to enhance BD's portfolio of smart connected care solutions, adding a suite of advanced monitoring technologies and AI-enabled clinical decision tools.
Critical Care is recognized for pioneering the hemodynamic monitoring category and its products are utilized in over 10,000 hospitals worldwide. The acquisition is expected to be immediately beneficial to BD's financial metrics, including revenue growth, adjusted gross margin, adjusted operating margin, and adjusted earnings per share (EPS). This move aligns with BD's strategy to foster sustained shareholder value and innovation within the medical technology space.
The acquired division, which employs approximately 4,500 people, mostly in Irvine, California, generated over $900 million in revenue in 2023. The transaction is anticipated to close by the end of the calendar year, subject to customary regulatory reviews and closing conditions.
Tom Polen, chairman, CEO, and president of BD, stated that this acquisition presents new avenues for growth and value creation, leveraging BD’s global reach and operational excellence. Katie Szyman, currently corporate vice president of Critical Care, will continue to lead the unit within BD, reporting to Mike Garrison, executive vice president and president of the BD Medical segment.
BD plans to finance the purchase with about $1 billion in cash and $3.2 billion in new debt. Following the acquisition, BD's net leverage is expected to be approximately 3x, with a targeted reduction to 2.5x within 12 to 18 months, primarily through the use of free cash flows for debt repayment.
The integration of Critical Care is projected to result in synergies from cost savings and supply chain efficiencies while maintaining its focus on innovation and market presence. Critical Care's portfolio, including the Swan Ganz pulmonary artery catheter and various sensors and monitors, complements BD's existing offerings in operating rooms and intensive care units.
This news is based on a press release statement from BD.
InvestingPro Insights
As Becton, Dickinson and Company (NYSE: BDX) moves forward with its strategic acquisition of Edwards Lifesciences’ Critical Care division, the company's financial stability and growth potential come into focus.
BD's impressive history of raising its dividend for 53 consecutive years highlights its commitment to providing shareholder value, a trend that is expected to continue with the integration of the new acquisition. This steadfast approach to dividends is underscored by the company's ability to maintain dividend payments for 54 consecutive years, demonstrating its financial resilience and dedication to investors.
From a valuation perspective, BD's current P/E ratio stands at 50.5, indicating a premium market valuation, which may reflect investor confidence in the company's long-term growth prospects. Analysts have also predicted that the company will be profitable this year, a positive sign that may reassure investors looking for stable earnings amidst the acquisition. Despite the challenges of trading near its 52-week low, BD's low price volatility suggests a level of market stability that could appeal to risk-averse investors.
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