In a major strategic move, Becton, Dickinson and Company (NYSE: BDX), widely known as BD, has entered into a definitive agreement to acquire the Critical Care product group from Edwards Lifesciences (NYSE: EW) for $4.2 billion in cash. This acquisition is poised to significantly bolster BD’s offerings in smart connected care solutions, leveraging Critical Care’s innovative technologies and substantial market presence.

Overview of the Deal

Under the terms of the deal, BD will purchase the Critical Care division, a leader in advanced monitoring solutions equipped with cutting-edge artificial intelligence (AI) algorithms. This sector has pioneered hemodynamic monitoring, extensively utilized across over 10,000 hospitals worldwide to enhance cardiovascular care for critically ill patients. The acquisition is not only a testament to BD’s commitment to expanding its healthcare technology portfolio but also aligns perfectly with its strategic goals of improving patient outcomes through innovative technologies.

Financial Insights and Strategic Benefits

The acquisition price of $4.2 billion will be funded through a combination of $1 billion in cash and $3.2 billion in new debt. With this acquisition, BD aims to achieve a net leverage of approximately 3x, with plans to reduce this to a long-term target of 2.5x within 12-18 months post-closing. This transaction is expected to be immediately accretive to BD’s key financial metrics, including revenue growth, gross margins, and earnings per share. Notably, the Critical Care sector reported revenues exceeding $900 million in 2023, with projected annual growth rates of 6-7%.

Expected Synergies and Growth Opportunities

The integration of Critical Care into BD’s portfolio is expected to drive substantial value creation through synergies in supply chain efficiencies and general administrative costs. Moreover, the acquisition will enable BD to leverage a combined set of data and platforms to foster innovation across their product lines. Critical Care’s robust product suite, including the renowned Swan Ganz catheters and various monitoring technologies, will enhance BD’s capabilities in critical care environments, further solidifying its market position.

Closing and Future Outlook

Subject to customary regulatory approvals and closing conditions, the transaction is anticipated to close by the end of this calendar year. Upon completion, Critical Care will continue to operate as a separate unit within BD’s Medical segment, maintaining its operational base in Irvine, California, with Katie Szyman leading the unit.

Advisers to the Deal

BD has engaged Perella Weinberg Partners and Citi as financial advisers, while legal counsel is provided by Ropes & Gray, LLP.

This strategic acquisition marks a significant step for BD in its quest to reshape the landscape of medical technology through smart, connected care solutions. It underscores the company’s proactive approach in enhancing patient care and operational efficiencies via advanced technologies and strategic expansions.

  AI healthcare technology, BD, Critical Care acquisition, Edwards Lifesciences, medical technology, smart healthcare solutions