August 12, 2022


Health for a better future

Becton Dickinson To Spin Diabetes Care Unit In 2022

Deal Overview

On May 6, 2021, Becton, Dickinson and Company

(NYSE: BDX, $246.63, Market Capitalization: $71.7 billion), a leading global medical technology company, announced that its Board of Directors have unanimously authorized management to go ahead with a plan to spinoff the Diabetes Care business into an independent, publicly traded company (“NewCo”). Post spin-off, BDX will continue to focus on leading medical technologies and solutions across its portfolio of BD Medical, BD Life Sciences and BD Interventional segments.

The spin-off is expected to be effected through the distribution of NewCo common stock to Becton, Dickinson and Company shareholders in 1H22, subject to approval from the Board of Directors and regulatory authorities along with the effectiveness of Form 10 registration statement with the SEC. The transaction is intended to be tax-free to shareholders, except to the extent of cash received in lieu of fractional shares.

The spin-off will not have any impact on the current dividend payments and the company expects to receive a cash distribution from the NewCo at closing of the transaction. Becton, Dickinson and Company intends to maintain its investment grade rating and continue investing in opportunities focused on high growth market categories.

The Diabetes Care business is a leading producer of diabetes injection devices with ~8 billion injection devices produced annually and serving ~30 million patients globally. In 2020, the NewCo generated ~$1.1 billion in revenues with 48% of revenues generated outside of the US, which includes 17% of the revenues from emerging markets. NewCo will have manufacturing sites in the US, Ireland and China and is expected to have offices in New Jersey and Massachusetts.

Devdatt (Dev) Kurdikar, joined BDX in February 2021 as worldwide President of BD Diabetes Care, will be CEO of the NewCo. Jacob (Jake) Elguicze, former Treasurer and Head of Investor Relations for Teleflex

, joined the company in May 2021 and will be assuming the role of CFO of the NewCo. The company will name the Board of Directors and other executives of the NewCo later.

Perella Weinberg Partners LP, Morgan Stanley & Co

. LLC, Wachtell, Lipton, Rosen & Katz, Skadden, Arps, Slate, Meagher & Flom LLP, Baker McKenzie, and PricewaterhouseCoopers are acting as advisors to BDX in connection with the separation.


On December 29, 2017, Becton, Dickinson and Company completed the acquisition of C.R. Bard, Inc., a global medical technology company operating in the fields of vascular, urology, oncology and surgical specialty products. According to deal terms, Bard shareholders received ~$222.93 in cash and 0.5077 shares of BDX common stock per Bard share.

Earlier, on March 17, 2015, BDX completed the acquisition of CareFusion Corporation, a global medical technology company with a comprehensive portfolio of products in the areas of medication management, infection prevention, operating room and procedural effectiveness and respiratory care. The acquisition helped in positioning BDX as a global leader in medication management.

Deal Rationale

Becton, Dickinson and Company (BDX) is one of the largest medical technology companies in the world, with a wide variety of offerings across categories and use cases. In FY20, the company adapted a strategic framework, “BDX 2025” to deliver sustainable growth and create value for shareholders, with the basic drivers being to grow, simplify and empower. The company endeavors to continue to expand its business through maintaining robust product pipeline, enhanced focus on core offerings and high growth segments, deepening research and development investment to develop innovative solutions, leveraging global scale to further expand into emerging markets and engaging in acquisitions to support the company’s internal growth. Moreover, the company is simplifying its business processes, rationalizing its product portfolio, and streamlining its manufacturing footprint to increase efficiency, thereby improving profitability. In line with the portfolio simplification strategy of the “BDX 2025” framework, the company has decided to spin-off its Diabetes Care business (sub-segment within the Medical segment). Management reckons that the separation shall be a value additive for both units, positioning them for sustainable and extended growth and enabling both to focus on their core markets, innovations, and distinct customer outcomes. Moreover, the spin-off will allow for more efficient capital and resource allocation, based on disparate risk and return characteristics of the two businesses.

As a standalone entity, the NewCo will be the global leader in insulin injection devices, manufacturing ~8 billion devices and serving ~30 million patients annually. As per The International Diabetes Federation, number of adults living with diabetes is set to grow to 700 million by 2045E (2019: 463 million) with some of the higher prevalence rates of the chronic condition expected from emerging markets. Thus, the Newco will benefit from its widespread geographical footprint to exploit this demographic trend. Moreover, the separation will lend NewCo with the strategic flexibility to build upon its leadership position in the diabetes care market, attract new investors and effectively use its publicly traded stock to bring in, incentivize and retain talented human resources. Moreover, strong cash flow generation and expected capital structure of the NewCo should provide flexibility in raising research and development investment and consummating acquisitions deals to broaden its portfolio and enter adjacent or new growth categories.

For RemainCo, the spin-off will lead to increased focus on strategic businesses with intensified research and development activities and tuck-in acquisitions in higher growth areas to drive the top-line. Furthermore, the distinct business profile of the diabetes business from the rest of the portfolio prompted Becton, Dickinson and Company to undertake the separation. Unlike the diabetes business, rest of the company’s businesses sell most of their products through healthcare systems, thereby providing an opportunity to streamline and consolidate supply chains and go-to-market strategies to generate operating efficiencies. Becton, Dickinson and Company believes that the spin-off will aid the company in achieving its long-term targets of mid-single digit revenue growth and double-digit total return growth.

For the period of FY18-20, Becton, Dickinson and Company has grown at 3.5% CAGR on a consolidated basis, while the Diabetes Care business contracted 1.0% over the same time, dragging overall growth. Even though the company does not provide sub-segment level profitability metrics, Becton, Dickinson and Company’s management has indicated that the Diabetes Care businesses operating income growth has been lower than that of the overall company. Thus, we opine that the separation will improve top-line and profitability growth outlook for the RemainCo.

The acquisitions of C.R. Bard, Inc. in 2017 and CareFusion Corporation in 2015 expanded BDX’s geographic footprint and deepened its product portfolio. However, since completing these acquisitions, the company has been engaged in portfolio rationalization and realignment initiatives, and the recent spin-off announcement seems to be another step in that direction. We reckon that the sharp decline in the leverage level to 2.4x as of end of March 2021 (3.4x as of end of March 2020) has afforded Becton, Dickinson and Company the opportunity to spin-off the Diabetes Care business with a capital structure that provides financial flexibility to pursue growth opportunities.

Company Description

Becton, Dickinson and Company (BDX)

Becton, Dickinson and Company (BDX) is a global medical technology company, engaged in the development, manufacture and sale of a broad range of medical supplies, devices, laboratory equipment and diagnostic products. The company caters to healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. BDX provides customer solutions focused on improving medication management and patient safety; supporting infection prevention practices; equipping surgical and interventional procedures; improving drug delivery; aiding anesthesiology care; enhancing the diagnosis of infectious diseases and cancers; advancing cellular research and applications; and supporting the management of diabetes. BDX’s operations are comprised of three worldwide business segments: BD Medical, BD Life Sciences and BD Interventional. As of September 30, 2020, BDX had ~72,000 associates located in over 70 countries and engaged in different roles.

Diabetes Care Business (NewCo)

The spin-off entity (NewCo) will comprise of the Diabetes Care segment of the parent company. The Diabetes Care business is a leading producer of diabetes injection devices with ~8 billion injection devices produced annually and serving ~30 million patients globally. In 2020, the NewCo generated ~$1.1 billion in revenues with 48% of revenues generated outside of the US, which includes 17% of the revenues from emerging markets. NewCo will have manufacturing sites in the US, Ireland and China and is expected to have offices in New Jersey and Massachusetts.