Business Context and Reporting Period
This Form 8-K filing by Becton, Dickinson and Company (BD) is dated June 5, 2017. The report details the creation of direct financial obligations through a significant debt offering and updates regarding the proposed acquisition of C.R. Bard, Inc. (Bard).
Key Financial Metrics and Debt Issuance
On June 6, 2017, BD completed an underwritten public offering of U.S. Dollar and Euro-denominated notes. The filing does not provide revenue, profit, cash flow, or margin data as this is a current report on specific events rather than a periodic financial statement.
U.S. Dollar Notes Issued
- 2019 Notes: $725 million at 2.133% interest.
- 2020 Notes: $1.0 billion at 2.404% interest.
- 2022 Notes: $1.8 billion at 2.894% interest.
- 2022 Floating Rate Notes: $500 million (Floating Rate).
- 2024 Notes: $1.75 billion at 3.363% interest.
- 2027 Notes: $2.4 billion at 3.700% interest.
- 2047 Notes: $1.5 billion at 4.669% interest.
Euro Notes Issued
- 2019 Euro Notes: €700 million at 0.368% interest.
Total aggregate principal amount of U.S. Notes issued is $9.675 billion.
Material Changes and Transaction Details
The primary material change is the substantial increase in long-term debt obligations to fund operations and the Bard Acquisition. Additionally, BD announced an extension of the expiration date for its exchange offers regarding Bard's outstanding notes:
- $500 million of Bard's 4.400% Notes due 2021.
- $500 million of Bard's 3.000% Notes due 2026.
- $149.82 million of Bard's 6.700% Notes due 2026.
Redemption and Mandatory Provisions
Most U.S. Notes are subject to "make-whole" redemption prior to specific dates, after which they may be redeemed at 100% of principal. The 2022 Floating Rate Notes cannot be redeemed prior to maturity. A critical provision states that if the Bard Acquisition is not consummated by April 23, 2018, or if the merger agreement is terminated prior to that date, the 2020, 2022, 2024, 2027, and 2047 Notes will be mandatorily redeemed at 101% of principal plus accrued interest.
Guidance, Risks, and Contingencies
The filing contains forward-looking statements regarding the Bard Acquisition and the exchange offer. Key risks and contingencies include:
- Acquisition Completion: The ability to successfully complete the Bard acquisition on anticipated terms and timing.
- Exchange Offer: The ability to consummate the Bard exchange offer timely.
- Change of Control: Holders of U.S. and Euro Notes have the right to require BD to purchase their notes at 101% of principal plus accrued interest upon a Change of Control Triggering Event.
- Events of Default: Defined as failure to pay interest (30 days), failure to pay principal, failure to perform covenants (60 days), or bankruptcy/insolvency.
Investor Verification Checklist
- Verify the status of the Bard Acquisition and whether the April 23, 2018 deadline for mandatory redemption of specific notes is at risk.
- Review the definitive proxy statement/prospectus (Form S-4) for details on the Bard transaction and participant interests.
- Confirm the terms of the exchange offer for Bard's outstanding notes and the extended expiration date.
- Assess the impact of the new $9.675 billion in U.S. debt and €700 million in Euro debt on BD's leverage ratios and liquidity.
- Monitor the "make-whole" redemption provisions to understand potential early repayment costs if interest rates decline.