Sam Brusco, Associate Editor05.06.21
BD’s board of directors 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," Tom Polen, chairman, CEO, and president of BD told the press. "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. We are proud of BD's leadership in driving innovation to support people with diabetes and believe this transaction will empower NewCo to advance a more focused strategy and capital allocation policy to further advance innovation and growth specific to its unique market. 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. We believe today's announcement demonstrates our commitment to maximize long-term value for all stakeholders—including our patients, customers, employees and shareholders."
The transaction is expected to create two, independent companies with:
BD’s Diabetes Care business has roots in BD's introduction of the world's first specialized insulin syringe in 1924. The Diabetes Care business has played a leading role in driving adoption of insulin syringes and insulin pens combined with pen needles as the leading modality for insulin injection. Today, the Diabetes Care business is the leading producer of diabetes injection devices, producing approximately 8 billion injection devices annually and serving about 30 million patients—more than any other company in the world.
In fiscal 2020, the Diabetes Care business generated revenues of nearly $1.1 billion, with 48 percent of revenues generated outside of the United States, including 17 percent 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.
BD management expects as a separate independent entity NewCo will be better positioned to pursue strategic priorities, build on its current leadership positions in the diabetes care market, and attract new investors. 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.
Pursuing the Diabetes Care business spinoff demonstrates BD's strong ongoing commitment to the company's BD 2025 strategy, which includes its three strategic pillars of Grow, Simplify and Empower. BD intends to maintain its investment grade rating while investing in growth opportunities focusing on higher growth market categories. BD will also continue to increase its R&D investments and strengthen its pipeline across three innovation themes, which include applying smart devices, robotics, analytics, and artificial intelligence to improve care processes; enabling new care settings to enhance patient experience and lower costs; and investing to improve diagnosis and treatment of chronic disease.
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. There can be no assurance regarding the ultimate timing of the proposed transaction or that the transaction will be completed at all.
Devdatt (Dev) Kurdikar, 52, currently worldwide president of BD Diabetes Care, will be CEO of NewCo. Kurdikar joined BD in February 2021.
"I am honored to be selected to lead NewCo and excited by the opportunities ahead to create additional value for our patients, customers and BD shareholders, as well as new opportunities for our passionate associates," said Kurdikar. "BD has a long history of serving people with diabetes globally. As the CEO of NewCo, I plan to build on our strong foundation and drive growth by investing in innovation and allocating our capital to pursue strategic growth opportunities. I am fully confident that, as a standalone business, NewCo will have the flexibility to invest in the right areas to become a more nimble, agile and innovative company in the rapidly growing diabetes space."
Jacob (Jake) Elguicze, 47, former treasurer and head of investor relations for Teleflex joined BD in May 2021 and will be CFO of NewCo. Elguicze has extensive experience in treasury, financial planning, reporting and analysis, and investor relations.
"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," Tom Polen, chairman, CEO, and president of BD told the press. "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. We are proud of BD's leadership in driving innovation to support people with diabetes and believe this transaction will empower NewCo to advance a more focused strategy and capital allocation policy to further advance innovation and growth specific to its unique market. 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. We believe today's announcement demonstrates our commitment to maximize long-term value for all stakeholders—including our patients, customers, employees and shareholders."
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
- NewCo to leverage its market-leading insulin delivery devices
BD’s Diabetes Care business has roots in BD's introduction of the world's first specialized insulin syringe in 1924. The Diabetes Care business has played a leading role in driving adoption of insulin syringes and insulin pens combined with pen needles as the leading modality for insulin injection. Today, the Diabetes Care business is the leading producer of diabetes injection devices, producing approximately 8 billion injection devices annually and serving about 30 million patients—more than any other company in the world.
In fiscal 2020, the Diabetes Care business generated revenues of nearly $1.1 billion, with 48 percent of revenues generated outside of the United States, including 17 percent 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.
BD management expects as a separate independent entity NewCo will be better positioned to pursue strategic priorities, build on its current leadership positions in the diabetes care market, and attract new investors. 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.
Pursuing the Diabetes Care business spinoff demonstrates BD's strong ongoing commitment to the company's BD 2025 strategy, which includes its three strategic pillars of Grow, Simplify and Empower. BD intends to maintain its investment grade rating while investing in growth opportunities focusing on higher growth market categories. BD will also continue to increase its R&D investments and strengthen its pipeline across three innovation themes, which include applying smart devices, robotics, analytics, and artificial intelligence to improve care processes; enabling new care settings to enhance patient experience and lower costs; and investing to improve diagnosis and treatment of chronic disease.
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. There can be no assurance regarding the ultimate timing of the proposed transaction or that the transaction will be completed at all.
Devdatt (Dev) Kurdikar, 52, currently worldwide president of BD Diabetes Care, will be CEO of NewCo. Kurdikar joined BD in February 2021.
"I am honored to be selected to lead NewCo and excited by the opportunities ahead to create additional value for our patients, customers and BD shareholders, as well as new opportunities for our passionate associates," said Kurdikar. "BD has a long history of serving people with diabetes globally. As the CEO of NewCo, I plan to build on our strong foundation and drive growth by investing in innovation and allocating our capital to pursue strategic growth opportunities. I am fully confident that, as a standalone business, NewCo will have the flexibility to invest in the right areas to become a more nimble, agile and innovative company in the rapidly growing diabetes space."
Jacob (Jake) Elguicze, 47, former treasurer and head of investor relations for Teleflex joined BD in May 2021 and will be CFO of NewCo. Elguicze has extensive experience in treasury, financial planning, reporting and analysis, and investor relations.
