BD (NYSE: BD)+ announced that it signed a definitive agreement to sell its surgical instrumentation platform to Steris (NYSE:STE) for $540 million.
The divestiture includes V. Mueller, Snowden-Pencer and Genesis branded products. BD reports its surgical instrumentation platform as part of its Surgery unit within its Interventional segment.
In the deal, Steris also gets three manufacturing facilities in St. Louis, Cleveland, and Tuttlingen, Germany. Approximately 360 employees across the unit are set to transfer to Steris upon completion of the transaction.
BD and Steris expect the divestiture to close within the former’s fiscal year, ending Sept. 30, 2023. It remains subject to customary closing conditions and U.S. Federal Trade Commission (FTC) approval.
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The BD view
BD said this divestiture “advances the ‘Simplify’ pillar of the BD 2025 strategy.” It marks an important step in simplifying the company’s product portfolio and manufacturing network.
The company expects the transaction to support its financial goals, which include revenue growth and margin expansion. It plans to deploy cash proceeds consistently with its capital allocation priorities, enabling a continued durable growth profile.
BD also said the platform complements Steris’ healthcare segment. It enables the company to better meet hospital and surgery center product and service needs.
“The surgical instrumentation platform has a 120-year legacy of providing reliable and trusted high-quality products, and Steris is well positioned to maximize the value of this extensive portfolio and is fortunate to be adding such a dedicated and talented team to its organization,” said Rick Byrd, president of the Interventional segment at BD. “This transaction further advances the BD Interventional segment’s focus on high-growth end markets. We look forward to continuing to address unmet needs in health care through a highly differentiated and innovative set of solutions and products.”
The Steris view
Steris said the projected annual revenue for the acquired businesses totals approximately $170 million. Adjusted earnings before interest and taxes come to approximately $45 million.
Under the agreement, Steris executes the purchase of surgical instrumentation, laparoscopic instrumentation and sterilization container assets from BD. The company plans to finance the transaction through a combination of debt and cash on hand.
Steris plans to update its fiscal 2024 outlook to reflect the transaction’s impact once it closes. The company expects an accretive effect on adjusted earnings per diluted share in fiscal 2024.
“We are pleased to announce the signing of this agreement , as the brands we are adding will strengthen, complement and expand Steris’ product offerings within our healthcare segment. In particular, the focus on the operating room and sterile processing department fits perfectly with our healthcare customers,” said Dan Carestio, president and CEO of Steris. “We welcome these teams to Steris and look forward to working together to enhance our value to our customers.”
Mike Matson, senior research analyst at Needham & Co., said in a note that the acquisition makes sense for Steris, with the new brands bolstering its Healthcare business offerings.
