Becton Dickenson Acquires CareFusion and It’s a Great Deal

I am always happy to see acquisitions turn out accretive instead of dilutive. The synergies and cost reductions of this acquisition will be significant, most notably selling CareFusion’s products through BD’s wider-reaching channels.

Becton Dickenson seems to have gotten a good deal in its $57/share price tag for buying CareFusion Corporation, perhaps a little too good. The share price of CF has doubled over the past two years, compared to the broader market up by half.

The rapid growth of CF may not be entirely organic, with questionable decisions in its recent past. There was an $11m bribery scandal where CF paid a Dr. Denham to influence his decision on the Safe Practices Committee. There was also the $40m court settlement for paying kickbacks to physicians and suggesting they use certain products off-label.

This acquisition has all the standard benefits we expect: cutting costs, increasing revenue, increasing efficiencies, but the bonus that we do not always get to see in mergers and acquisitions is that if there are any problems in the culture or ethics behind CareFusion team, they are likely to be overwritten by the larger Becton Dickenson.

With a handshake and a signature, $1.5 billion is created for BD and $2 billion for CF shareholders.