Becton Dickinson, one of the world’s largest medical technology companies, said in a statement Tuesday it has entered into a definitive agreement to sell its surgical instrumentation platform to Steris, an Ohio-based medical device firm specializing in infection prevention.
The sale includes BD’s V. Mueller, Snowden-Pencer and Genesis brands as well as three manufacturing facilities in St. Louis, Cleveland, and Tuttlingen, Germany. Some 360 employees will transfer to Steris when the deal closes by the end of September.
BD’s surgical instrumentation platform is part of the company’s interventional business segment.
In a statement, New Jersey-based BD said selling the platform “advances the ‘Simplify’ pillar” of the firm’s strategy to slim its product portfolio and manufacturing network.
The transaction is significant for Steris, which employs 17,000 people worldwide. The company had global sales of $4.96 billion and a net loss of $27.9 million in its most recent fiscal year.
Needham analysts led by Mike Matson applauded the transaction.
“We believe that the acquisition makes sense, as the brands broaden [Steris’] Healthcare business offering. We estimate that the acquisition will be ~$0.12 (~1.4%) accretive to STE's FY24E EPS assuming that the deal closes on 9/30/23 and ~$0.25 (~2.6%) accretive to STE's FY25E EPS,” Matson wrote in an emailed note on Tuesday.
The transaction is “yet another positive step forward in Becton’s transformation toward becoming a faster-growing/higher-margin ‘New Becton,’” as part of the restructuring led by CEO Tom Polen, appointed in January 2020, wrote Stifel analysts led by Rick Wise. They noted that Polen has already made some 20 tuck-in acquisitions and led the spin off of the embecta diabetes care unit in April 2022.
Dan Carestio, Steris’ CEO, said in a statement that the DB brands will “strengthen, complement and expand STERIS’s product offerings within our Healthcare segment,” adding that the focus on the operating room and sterile processing equipment “fits perfectly with our healthcare customers.”
The assets included in the sale account for annualized revenue of approximately $170 million, BD said, adding that if the transaction closes as expected within BD's fiscal year 2023, the impact to adjusted earnings per share would be “immaterial.”
Shares in Steris dropped 1.43%, or $3.06, to $210.49 in late morning trading on Tuesday.
Updates with comments from Steris and analysts.