Becton Dickinson’s goal is to split the bioscience units because starboard requirements are the same

Becton Dickinson (BDX) is a global medical technology company consisting of two businesses: (i) MedTech, consisting of BD Medical (drug delivery and management solutions, advanced monitoring and drug systems) and BD intervention (vascular, urology, urology, urology Surgery, urology, urology, urology, urology, urology) consists of. , specialty in Oncology and Surgery) and (ii) BD Life Sciences, which provides products for the collection and transportation of diagnostic specimens, as well as instruments and reagent systems to detect a range of infectious diseases. BDX is a market leader in the infusion pump and preperfusion syringe businesses within MedTech, a position that has been enhanced by the growth in popularity of GLP-1. Historically, the two businesses have similar sizes, but MedTech has grown faster, now accounting for $15.1 billion in revenue and $6.7 billion in revenue, contributing to interest, taxes, depreciation and amortization compared to life sciences. $5.2 billion in EBITDA.

The question here is simple and clear: the company operates two different businesses, which are at different stages, with different growth rates and valuation multiples, and there is no real reason to be under the same roof. MedTech’s business growth rate (middle digits) is higher than Life Sciences (low single numbers), but valuations are lower than Life Sciences (13-14 times the time) because Medtech is Medtech IS under the rules of 40 companies Evaluation – i.e., its growth rate plus its operating margin should be equal to or exceed 40. Life science is structurally more stable, with periodic things like periodicity and reduced exposure to reimbursement pressure. In addition, the presence of major industry players such as Thermo Fisher and Danaher has given the Life Sciences business a little combined value, thus slightly increasing its valuation multiple.

This is not always a problem, but in the case of BDX, the entire company trades at 16.8 times EBITDA, closer to the value of its lowest value part. As starboard recommends, rotating or selling a life science business is an easy solution to a simple problem. The creation of short-term value here is simple. If separated, the MedTech business should be valued based on its EBITDA valuation that grows 13 to 14 times, while Life Sciences should receive a valuation of 20 times north. This alone will result in $110 billion north of the low-end valuation in multiple ranges. However, separation can realize the creation of other values. Through the success of its own sector and the ability to expand the universe of potential investors to two pure gaming businesses, it can incentivize management, which is just a separate table bet. The real value comes from two independent management teams that can better focus on their business and invest resources. In the case of BDX, this could increase profit margins by integrating an acquisition that is ignored as part of a large company. It is reported that the life sciences business is valued at $30 billion. This is slightly lower than the expected 20x EBITDA multiple valuation we think can receive. We hope this is because BDX may retain certain parts of the life sciences business that works synergistically with MedTech.

This is not always a problem, but in the case of BDX, the entire company trades at 16.8 times EBITDA, closer to the value of its lowest value part. As starboard recommends, rotating or selling a life science business is an easy solution to a simple problem. The creation of short-term value here is simple. If separated, the MedTech business should be valued based on its EBITDA valuation that grows 13 to 14 times, while Life Sciences should receive a valuation of 20 times north. This alone will result in $110 billion north of the low-end valuation in multiple ranges. However, separation can realize the creation of other values. Through the success of its own sector and the ability to expand the universe of potential investors to two purebred businesses, it can inspire management, which is just a separate table bet. The real value comes from two independent management teams that can better focus on their business and invest resources. In the case of BDX, this could increase profit margins by integrating an acquisition that is ignored as part of a large company. It is reported that the life sciences business is valued at $30 billion. This is slightly lower than the expected 20x EBITDA multiple valuation we think can receive. We hope this is because BDX may retain certain parts of the life sciences business that works synergistically with MedTech.