BD, Apax Partners to Form Joint Venture for Respiratory Solutions

BD (Becton, Dickinson and Company), a global medical technology company, has announced a definitive agreement to sell 50.1 percent of its Respiratory Solutions business to funds advised by Apax Partners, a leading global private equity firm, and form a joint venture that will operate as a new, independent company.
 
The new company will include all business lines within BD’s Respiratory Solutions business including Ventilation, Respiratory Diagnostics, Vital Signs and AirLife, and have estimated annual revenue of approximately $900 million. BD’s Respiratory Solutions facilities will transfer to the new company, including locations in Yorba Linda, Calif.; Palm Springs, Calif.; Plymouth, Minn.; Mexicali, Mexico; Cotia, Brazil; Hoechberg, Germany; and Shenzen, China. The new company will employ more than 5,000 associates around the world. BD will retain 49.9 percent of the company as a significant but non-controlling minority owner.
 
“We have been proactively targeting the industry for respiratory devices and have been impressed with the continued progress the company has made over the past few years,” said Steven Dyson, partner at Apax Partners. “We are pleased to have the opportunity to work with the entire team in further developing Respiratory Solutions’ position as a focused and leading global player. In order to take advantage of this opportunity, we are highly supportive of an investment program to further strengthen the business’s existing platform, both organically and through acquisitions.”
 
The transaction values the entire business today at nearly $500 million. The structure of the transaction reflects the completion of a thorough strategic review process and BD’s determination that the business is non-core to its long-term strategy. By maintaining a significant but non-controlling minority ownership position, BD intends to maximize value by participating in future earnings and the anticipated appreciation in valuation.
 
The transaction is expected to close in late fiscal year 2016 or early fiscal year 2017. Due to the proximity to the end of its fiscal year 2016, BD expects an immaterial impact to its fiscal year 2016 guidance. BD plans to use net proceeds for share repurchases, subject to market conditions.  In fiscal year 2017, due to the limited profitability of the business today, BD anticipates earnings dilution of approximately $0.10 to $0.14. The company expects to record a material tax loss on the transaction at the time of closing.
 
“We have determined that the Respiratory Solutions business and its associates will be best served under a different ownership model that will provide more strategic focus and investment to grow the business into a pure-play, global respiratory care leader,” said Tom Polen, president of BD’s Medical Segment. “We believe in Apax Partners’ track record of success creating value and improving margins, and as part of the joint venture, we will continue to have a strong interest in the growth and success of the business.”
 
The completion of the transaction is subject to pending regulatory approval, consultations with employee representative bodies in Europe and customary closing conditions.