A Look at BD’s Deal Rationale in Its C.R. Bard Acquisition

Becton, Dickinson and Company (or BD) (BDX) operates in two segments: BD Medical and BD Life Sciences. Both segments have a portfolio of market-leading products and grow inorganically and through innovation.

BD Medical mainly sells diagnostic tools and laboratory supplies. BD Life Sciences largely deals with medication management, including drug delivery devices, diabetes prevention, infection prevention, and safety. BD had sales of $12.5 billion in 2016. For more information, be sure to read An Overview of Becton, Dickinson and Company’s Business Model.

BD’s acquisition of C.R. Bard is one of the many recent large acquisitions in the medical device industry in the United States. They include Abbott Laboratories’ (ABT) acquisition of St. Jude Medical, Medtronic’s (MDT) acquisition of Covidien, and Zimmer’s acquisition of Biomet to form Zimmer Biomet Holdings (ZBH).

These acquisitions are aimed at providing a comprehensive product portfolio to customers at more reasonable costs and enhanced efficiency. With changing industry dynamics, we’re witnessing customer consolidation with a large number of hospital mergers. So most medical device companies’ recent growth strategies are aimed at providing better, more comprehensive solutions to customers at lower costs.

BD acquired CareFusion in 2015. The deal positioned BD as the leader in medication management industry. With the acquisition of C.R. Bard, BD aims to further strengthen its market position and add Bard devices across its oncology and surgery product portfolio. The deal will further enhance its medication management and infection prevention business, accelerating its growth strategy.

According to Vincent Forlenza, BD’s chief executive officer, “Combining with Bard will accelerate our ability to offer more comprehensive, clinically relevant solutions to customers and patients around the globe, creating a strong partner for healthcare providers who are increasingly focused on delivering better outcomes at a lower total cost….We expect the transaction to contribute meaningfully to BD’s plans for revenue growth and margin expansion, and generate outstanding value both near- and long-term for shareholders.”

Next, let’s look at C.R. Bard’s business profile and what strategic benefits it brings to the deal.