What is BD shareholders' ownership stake and cash received in the transaction?

BD shareholders are expected to own approximately 39.2% of the combined Waters company, while Waters shareholders will own about 60.8%. BD will also receive a cash distribution of roughly $4 billion before completion, subject to adjustments for cash, working capital, and indebtedness. BD has committed to use at least half of that cash for share repurchases, with the rest going to debt repayment.

Why is the EBITDA figure for the business potentially misleading?

The ~$925 million calendar 2025 adjusted EBITDA figure is Waters' projection on a pro forma basis. Under SEC carve-out methodology, BD's standalone carve-out financials would allocate roughly $200 million of corporate overhead that won't transfer, and include about $100 million of one-time spin, transaction, and restructuring costs. As a result, EBITDA in BD's carve-out statements for the same period would be expected to be about $300 million lower.

What synergies and financial targets are management projecting?

Management expects about $345 million in annualized EBITDA synergies by 2030, made up of $200 million in cost synergies by year three (from manufacturing, supply chain, and SG&A) and $290 million in revenue synergies by year five (about $145 million EBITDA impact). The companies project mid-to-high single-digit revenue growth, about 500 basis points of adjusted operating margin expansion, and mid-teens annualized adjusted EPS growth over 2025 to 2030, with the deal expected to be accretive in year one.

What are the main risks and conditions to closing?

Closing depends on regulatory approvals, Waters shareholder approval, and other customary conditions, and is expected around the end of Q1 2026. Key risks cited include failure to close or delays, difficulty separating the business from BD, failure to achieve synergies, integration challenges, potential stockholder litigation, changes in tax treatment (the deal is intended to be generally tax-free), tariff-related volatility, and the risk that the combined company's credit ratings decline.

BDX 8-K: Regulation FD — Jul 14, 2025

01—Abstract

Summary

Summary of the 8-K filed July 14, 2025. Cited figures are marked; the original filing is the authoritative source.

On July 14, 2025, Becton, Dickinson and Company (BD) and Waters Corporation (WAT) announced definitive agreements to combine BD's Biosciences & Diagnostic Solutions business with Waters in a tax-efficient Reverse Morris Trust transaction valued at approximately $17.5 billion^a.

BD's Biosciences & Diagnostic Solutions business will be spun off to BD shareholders and simultaneously merged into a Waters subsidiary. Post-closing, Waters shareholders will own approximately 60.8% of the combined company and BD shareholders approximately 39.2%. BD will receive a cash distribution of roughly $4 billion^b, of which it has committed to use at least half for share repurchases and the remainder for debt repayment.

The transaction values the business at about 18.9x CY2025 EBITDA, based on Waters' 20-day VWAP as of July 11, 2025. The combined company is projected to have pro forma 2025 revenue of about $6.5 billion^c and adjusted EBITDA of about $2.0 billion, with management targeting roughly $345 million in annualized EBITDA synergies by 2030 ($200 million cost synergies by year three and $290 million revenue synergies by year five). Management expects mid-to-high single-digit revenue growth, roughly 500 basis points of adjusted operating margin expansion, and mid-teens adjusted EPS growth, with the deal accretive to adjusted EPS in year one.

Waters expects to assume about $4 billion^d of incremental debt, implying a 2.3x net debt-to-adjusted EBITDA leverage ratio at closing. The transaction is expected to close around the end of Q1 2026, subject to regulatory approvals and Waters shareholder approval.

For BD, the filing frames the deal as a step in its strategic refocus toward a pure-play medical technology company, which BD refers to as 'New BD.' New BD is expected to have about $17.8 billion in FY24 revenue, a targeted investment of roughly $1 billion in annual R&D, and a long-term net leverage target of about 2.5x. Investors should note that the deal is subject to significant execution risks, and that the carve-out EBITDA in BD's standalone financials is expected to be about $300 million lower than the $925 million figure cited for the business, due to allocated corporate overhead and one-time costs.

02—Key points

Key Highlights

Deal structure: Reverse Morris Trust combining BD's Biosciences & Diagnostic Solutions with Waters; ~$17.5B transaction value; BD holders to own ~39.2% and Waters holders ~60.8% of the combined company.
BD cash distribution: ~$4B to BD, with a commitment to use at least half for share buybacks and the balance for debt repayment.
Valuation: Transaction values the Biosciences & Diagnostic Solutions business at ~18.9x CY2025 EBITDA (based on Waters' 20-day VWAP as of 7/11/2025).
Pro forma financials: ~$6.5B 2025 revenue and ~$2.0B adjusted EBITDA; targeted ~$9B revenue and ~$3.3B adjusted EBITDA by 2030.
Synergies: ~$345M annualized EBITDA synergies by 2030, including $200M cost synergies by year three and $290M revenue synergies by year five.
Leverage and timing: Waters to assume ~$4B incremental debt, resulting in ~2.3x net debt/adjusted EBITDA at close; closing expected around end of Q1 2026, subject to regulatory and Waters shareholder approvals.
Carve-out caveat: BD's carve-out EBITDA for the business is expected to be ~$300M lower than the $925M headline figure due to ~$200M allocated corporate overhead and ~$100M one-time costs.

03—Questions

Frequently Asked Questions

What is BD shareholders' ownership stake and cash received in the transaction?
BD shareholders are expected to own approximately 39.2% of the combined Waters company, while Waters shareholders will own about 60.8%. BD will also receive a cash distribution of roughly $4 billion before completion, subject to adjustments for cash, working capital, and indebtedness. BD has committed to use at least half of that cash for share repurchases, with the rest going to debt repayment.
Why is the EBITDA figure for the business potentially misleading?
The ~$925 million calendar 2025 adjusted EBITDA figure is Waters' projection on a pro forma basis. Under SEC carve-out methodology, BD's standalone carve-out financials would allocate roughly $200 million of corporate overhead that won't transfer, and include about $100 million of one-time spin, transaction, and restructuring costs. As a result, EBITDA in BD's carve-out statements for the same period would be expected to be about $300 million lower.
What synergies and financial targets are management projecting?
Management expects about $345 million in annualized EBITDA synergies by 2030, made up of $200 million in cost synergies by year three (from manufacturing, supply chain, and SG&A) and $290 million in revenue synergies by year five (about $145 million EBITDA impact). The companies project mid-to-high single-digit revenue growth, about 500 basis points of adjusted operating margin expansion, and mid-teens annualized adjusted EPS growth over 2025 to 2030, with the deal expected to be accretive in year one.
What are the main risks and conditions to closing?
Closing depends on regulatory approvals, Waters shareholder approval, and other customary conditions, and is expected around the end of Q1 2026. Key risks cited include failure to close or delays, difficulty separating the business from BD, failure to achieve synergies, integration challenges, potential stockholder litigation, changes in tax treatment (the deal is intended to be generally tax-free), tariff-related volatility, and the risk that the combined company's credit ratings decline.

04—Continue

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