Becton, Dickinson and Company (BD) announced its board of directors has unanimously authorized management to proceed with a plan to spin off the company's Diabetes Care business as an independent, publicly traded company ("NewCo").
"The decision to spin off our Diabetes Care business is part of our active portfolio management and consistent with our BD 2025 strategy to Grow, Simplify and Empower," said Tom Polen, chairman, CEO and president of BD. "The spinoff will allow BD to strengthen its growth profile, enables a greater investment focus on our other core businesses and high-growth opportunities, and makes a greater impact for our customers and patients. As a standalone public company, we believe NewCo will be better positioned to leverage its leadership position in insulin delivery to advance vital, innovative solutions to the large and growing number of people living with diabetes worldwide."
BD believes the spinoff of the Diabetes Care business will create long-term value for BD shareholders and create a platform to continue to enhance the tools provided to people with diabetes. The transaction is expected to create two, independent companies with:
· Enhanced focus on strategic, operational and financial drivers to accelerate revenue growth
· Optimized product portfolios to better meet customer and patient needs
· More efficient resource and capital allocation to pursue each company's strategic goals
Today, the Diabetes Care business is the leading producer of diabetes injection devices, producing approximately eight billion injection devices annually and serving about 30 million patients — more than any other company in the world. NewCo's revenue and manufacturing footprint are geographically diverse. In fiscal 2020, the Diabetes Care business generated revenues of nearly $1.1 billion, with 48% of revenues generated outside of the United States, including 17% of revenues from emerging markets. NewCo will have manufacturing sites in the United States, Ireland, and China, and is expected to have office locations in New Jersey and Massachusetts. Today's diabetic population, estimated at 463 million individuals worldwide, is expected to increase to 700 million by 2045.
NewCo's margin structure, positive cash flows and anticipated capital structure are expected to provide financial flexibility to pursue increased investments in organic and inorganic growth opportunities. NewCo is also expected to use its publicly traded stock to more effectively attract, incentivize and retain qualified talent. Following the spinoff, BD will maintain category leadership positions across its portfolio in the BD Medical, BD Life Sciences and BD Interventional segments.
BD expects the spinoff to be accomplished through a distribution of stock in NewCo to BD shareholders. The spinoff is expected to be tax-free for U.S. federal income tax purposes, except to the extent of any cash received in lieu of fractional shares. BD does not expect the spinoff to impact its current dividend. The transaction is also expected to be completed in the first half of calendar year 2022, subject to the satisfaction of customary conditions, including final approval from the BD Board of Directors, regulatory approvals and the effectiveness of a Form 10 registration statement that will be filed with the SEC.
