Business Context and Reporting Period
This Form 8-K filing by Becton, Dickinson and Company (BD) covers events occurring on December 29, 2017. The primary event is the completion of the acquisition of C. R. Bard, Inc. ("Bard"), making Bard a wholly-owned subsidiary of BD. The filing also details the termination of BD's previous credit agreement and the restructuring of Bard's outstanding debt.
Key Financial Metrics and Transactions
- Acquisition Consideration: Bard shareholders received $222.93 in cash and 0.5077 shares of BD common stock for each Bard share held.
- Debt Financing: BD borrowed $2.25 billion under a Three-Year Term Loan Agreement to fund a portion of the cash consideration.
- Debt Termination: BD repaid in full and terminated all commitments under its Five Year Credit Agreement dated January 29, 2016.
- Debt Exchange: BD completed exchange offers for Bard's outstanding notes, issuing new BD Notes in exchange.
- Exchanged: $432.46 million of Bard 4.400% Notes (2021), $469.91 million of Bard 3.000% Notes (2026), and $137.03 million of Bard 6.700% Notes (2026).
- Remaining Outstanding Bard Notes: $67.54 million (4.400%), $30.09 million (3.000%), and $12.79 million (6.700%).
- New BD Notes Issued: $432.22 million (4.400% due 2021), $469.91 million (3.000% due 2026), and $137.03 million (6.700% due 2026).
Material Changes Versus Prior Period
The filing represents a material change in BD's capital structure and asset base due to the merger. Key changes include:
- Asset Acquisition: BD now owns 100% of C. R. Bard, Inc.
- Liability Restructuring: Significant portions of Bard's debt have been assumed by BD under new indentures with modified covenants. The restrictive covenants in the Bard indentures were eliminated, and reporting requirements were limited to the Trust Indenture Act of 1939.
- Liquidity Impact: The repayment of the prior credit agreement and the new $2.25 billion term loan alter the company's debt maturity profile and liquidity position.
Outlook, Risks, and Contingencies
- Registration Rights: BD entered into a Registration Rights Agreement requiring the filing of a registration statement within 180 days to allow the exchange of New BD Notes for registered notes. Failure to do so ("Registration Default") triggers additional interest payments of 0.25% per annum, increasing to a maximum of 0.50% per annum.
- Redemption Provisions: BD may redeem the 4.400% and 3.000% New BD Notes prior to specific dates (October 15, 2020, and February 15, 2026, respectively) at a price equal to the greater of 100% of principal or the present value of remaining payments plus a spread. The 6.700% Notes are not redeemable prior to December 1, 2026.
- Change of Control: Holders of New BD 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.
- Future Filings: Pro forma financial information is expected to be filed by amendment within 71 days of this report.
Investor Verification Checklist
- Verify the exact cash and stock consideration received by Bard shareholders ($222.93 cash + 0.5077 BD shares).
- Confirm the terms of the new $2.25 billion Term Loan and its impact on BD's leverage ratios.
- Review the specific covenants removed from the Bard Notes and the implications for BD's financial flexibility.
- Monitor the timeline for the Registration Statement filing to avoid potential additional interest costs on the New BD Notes.
- Check the upcoming pro forma financial statements for a consolidated view of BD and Bard's combined financial position.