Becton Dickinson aims

Becton Dickinson (BDX) is a global medical technology company composed of essentially two companies: (i) Medtech, which consists of the Medical BD (administration and administration solutions of medicines, advanced monitoring and pharmaceutical systems) and BD intervention (products For urology, vascular, vascular, vascular, oncological and surgical specialties) and (ii) BD Life Sciences, which provides products for the collection and transport of diagnostic samples, as well as instruments and reagent systems to detect a range of infectious diseases. Within Medtech, BDX is the market leader in infusion bombs and preferred syringe companies, a position that has been supercharged by the growth of the popularity of LPG-1. These two companies have been historically similar in size, but Medtech has been growing faster and now represents $ 15.1 billion of income and $ 6.7 billion of profits before interest, taxes, depreciation and amortization versus Life Sciences that contribute with $ 5.2 billion of income and $ 2.0 billion Ebitda.

The problem here is simple and simple: the company operates two different businesses that are in different stages with different growth rates and valuation multiples and without any real reason to be under the same roof. The Medtech business has a higher growth rate (average digits) than life sciences (low digits) but a multiple valuation (13 times 14 times) than life sciences (more than 20 times) because Medtech It is evaluated as a rule of 40 Company, that is, its growth rate plus its operational margins should match or overcome 40. Life sciences are considered more structurally stable and immune to things such as cyclicity, and has a reduced exposure to the reimbursement pressure. In addition, the presence of the main actors in the industry as Thermo Fisher and Danaher gives the life science business a small consolidation value that slightly increases its multiple assessment.

This is not always a problem, but in the case of BDX, the entire company is quoted at 16.8 times Ebitda, closer to the value of its least valuable part. As Starboard has recommended, turning or selling the life business of Life Sciences is a simple solution for a simple problem. The short -term value creation here is simple. If separate, the Medtech business must obtain an EBITDA assessment of 13 times to 14 times depending on its growth, while life sciences should obtain an assessment north of 20 times. This would only result in an north assessment of $ 110 billion at the lower end of the multiple range. But there is an additional value creation that could be achieved after separation. The ability to better motivate management with the success of its own division and expand the universe of possible investors to two pure playing companies are only the parts of the table in a separation. The real value comes from two separate management teams that can focus better and dedicate resources to their own businesses. In the case of BDX, that could lead to the improvement of the margin through the integration of acquisitions that neglected something as part of a larger company. There have been reports of an valuation price of $ 30 billion for the business science business. This is an assessment slightly below the 20 -time Ebitda multiple that we believe could receive. We hope it is because BDX can retain some parts of the life science business that synergize with Medtech.

This is not always a problem, but in the case of BDX, the entire company is quoted at 16.8 times Ebitda, closer to the value of its least valuable part. As Starboard has recommended, turning or selling the life business of Life Sciences is a simple solution for a simple problem. The short -term value creation here is simple. If separate, the Medtech business must obtain an EBITDA assessment of 13 times to 14 times depending on its growth, while life sciences should obtain an assessment north of 20 times. This would only result in an north assessment of $ 110 billion at the lower end of the multiple range. But there is an additional value creation that could be achieved after separation. The ability to better motivate management with the success of its own division and expand the universe of possible investors to two pure playing companies are only the parts of the table in a separation. The real value comes from two separate management teams that can focus better and dedicate resources to their own businesses. In the case of BDX, that could lead to the improvement of the margin through the integration of acquisitions that neglected something as part of a larger company. There have been reports of an valuation price of $ 30 billion for the business science business. This is an assessment slightly below the 20 -time Ebitda multiple that we believe could receive. We hope it is because BDX can retain some parts of the life science business that synergize with Medtech.