Becton to Sell Discovery Labware - Analyst Blog


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Becton, Dickinson and Company ( BDX ) recently revealed that it inked a definitive agreement to sell off its Discovery Labware sub-segment (not including Advanced Bioprocessing capability) of BD Biosciences. This unit will be bought by Corning ( GLW ). The cash deal amounts to about $730 million.

The deal is forecast to materialize by year-end 2012. It is subject to standard closing clauses and approval from regulators.

Becton Dickinson projects a gain upon fructification of the transaction. Sales and earnings per share emanating from the concerned assets are about $235 million and in the region of 23 cents to 27 cents, respectively.

Corning provides parts that lead to high tech know-how in areas such as life sciences and telecom. For its part, Corning Life Sciences is a cutting edge provider of scientific lab equipment.      

We remain cautious about Becton Dickinson due to the lack of major short-term catalysts. The rising demand for safety-needle products (with higher price points and margins) was the primary driver of the company's past growth, which is not expected to continue, given that the U.S. market is already largely penetrated.

On the positive side, Becton Dickinson's preeminent global healthcare products franchise is partly insulated from volatile macroeconomic conditions and structural deficiencies elsewhere in the healthcare delivery field.

Becton Dickinson faces a wide range of competitors, including Baxter International ( BAX ) in certain niches, in each of its three business segments. We currently have a long-term Neutral recommendation on the stock. The stock currently retains a Zacks #3 Rank, which translates into a short-term "Hold" recommendation.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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