Dive Brief:
- Waters has agreed to combine with BD’s biosciences and diagnostic solutions business in a deal valued at about $17.5 billion, the companies said Monday. The combined company will continue to operate under the Waters name and retain its listing on the New York Stock Exchange.
- The BD business will be spun off generally tax-free to BD shareholders and simultaneously merged with a subsidiary of Waters, through a structure known as a Reverse Morris Trust. Waters CEO Udit Batra will lead the new entity, and Waters’ headquarters will remain in Milford, Massachusetts.
- The transaction doubles Waters' total addressable market to about $40 billion, with an annual growth rate of 5% to 7%, according to the statement. Waters shares fell more than 11% to $313.66 in early NYSE trading on Monday, while BD shares were down about 1% at $174.12.
Dive Insight:
BD in February revealed its intention to separate the biosciences and diagnostics business, which generated $3.4 billion in revenue in BD’s 2024 financial year.
The merger with Waters creates a combined company with expected 2025 sales of about $6.5 billion.
Under the agreement, BD shareholders will own about 39.2% of the combined company and Waters the other 60.8%. BD will also receive a cash distribution of about $4 billion before the combination is completed. Waters is expected to assume approximately $4 billion of debt.
Waters will acquire both the flow cytometry and the microbiology business of BD, Leerink Partners analyst Puneet Souda said in a report to clients.
“Though BD's flow cytometry is [a] uniquely differentiated and leading business, we don't expect investors to view the deal attractively in the near-term given the dilution and now higher exposure to microbiology,” Souda wrote.
Jefferies analyst Tycho Peterson said he expected Waters shares to trade lower due to the deal size and other variables, but longer term saw merits to the transaction including the ability to create scale and an attractive margin profile.
The deal is expected to close near the end of the first quarter of calendar year 2026, subject to regulatory approvals, Waters shareholder approval and other closing conditions.
Jeff Jonas, portfolio manager at Gabelli Funds, said the merger does not put too much debt on the combined company, which will allow smaller dealmaking to continue.
“It’s a good fit for Waters that gets them closer to Thermo Fisher and Danaher in terms of size and scale,” Jonas said in an email.
