Inside the $12.2 Billion Becton Dickinson, CareFusion Deal

Becton, Dickinson & Co. (NYSE: BDX) recently announced that it will be acquiring the San Diego biomedical business CareFusion (NYSE: CFN) for $12.2 billion.

The purchase price is nearly three times CareFusion’s value on its first day of trading, when it closed with a market valuation of $4.2 billion.

The deal, expected to close in the first half of next year, will be the second largest purchase of a life science company in the Southern California region, according to U-T San Diego. The largest was the sale of Life Technologies in Carlsbad to Thermo Fisher Scientific, officially concluded in February for $13.6 billion.

The deal is the latest in a series of mergers and acquisitions within the health care industry, particularly in the medical technology sector as companies continue to seek greater efficiency.

The combination of the two companies’ complementary product portfolios will offer integrated medication management solutions and smart devices, from drug preparation in the pharmacy to dispensing on the hospital floor and administration to the patient. It will create one of the five largest medical device companies in the world.

The acquisition will improve quality of patient care and reduce health care costs by addressing unmet needs in hospitals, hospital pharmacies and alternate sites of care to increase efficiencies and reduce medication administration errors.

Under the terms of the transaction, Becton will pay $58 a share for CareFusion, most of that in cash. Upon closing, Becton shareholders will own approximately 92 percent of the combined company and CareFusion shareholders will own approximately 8 percent.

“BD’s acquisition of CareFusion allows us to align our highly complementary technologies and products to address unmet needs in the growing $20 billion global medication management industry, which leverages BD’s world-wide infrastructure,” said Vincent A. Forlenza, Becton, Dickinson’s Chairman, CEO and President. “With the targeted cost savings we have identified and the growth opportunities we see in bringing CareFusion products to more patients and healthcare workers around the world, we expect this transaction to create meaningful value for our shareholders, customers, employees and other stakeholders.”

CareFusion was formed in 2009 as a spinoff from Cardinal Health, bringing together well-known lines of medical equipment developed in San Diego by three companies — IVAC, IMED and Pyxis.

Goldman Sachs advised BD, and Skadden, Arps, Slate, Meagher & Flom provided legal advice. Perella Weinberg Partners and Barclays advised CareFusion and Wachtell, Lipton, Rosen & Katz provided legal advice.