Becton to merge unit with Waters in $17.5 billion deal

Reuters

4 hours ago

July 14 (Reuters) - Lab equipment maker Waters Corp (WAT.N), opens new tab will merge with rival Becton, Dickinson and Company's (BDX.N), opens new tab Biosciences & Diagnostic Solutions unit in a $17.5 billion deal, the companies said, creating a larger entity focused on high-volume medical testing.
The deal announced on Monday is structured as a so-called Reverse Morris Trust, which allows a company to avoid a big tax bill by spinning off a unit that it wants to divest while simultaneously merging it with another company.
The eye-popping deal value signifies the amount of stock that BD shareholders will have in the combined company - about 39.2% - and the $4 billion cash distribution that BD will receive at closing.
Becton's biosciences and diagnostic solutions unit makes products used to detect infectious diseases and cancers. The company has been looking to divest the unit to deepen focus on its core business of medical devices.
Funding for life sciences and microbiology research has been under pressure in recent years, impacting the performance of BD's biosciences business.
Meanwhile, sale of medical devices remained robust post pandemic due to the increased demand for outpatient and other surgeries.
The merger doubles Waters' addressable market to $40 billion, enhances recurring revenue streams and accelerates expansion into areas such as bioseparations, bioanalytical characterization and multiplex diagnostics, Waters CEO Udit Batra said.
The market reaction, however, was opposite, with Waters' shares falling 5.3% premarket following the announcement. Becton's stock was marginally down.
Leerink analysts said investors will likely not view the deal as attractive in the near term, given the higher exposure to microbiology amid recent funding cuts.
As part of the deal, which is expected to close in the first quarter of 2026, Waters will assume about $4 billion in incremental debt.