Waters Corporation and BD (Becton, Dickinson and Company) announced an agreement to combine BD’s Biosciences & Diagnostic Solutions business with Waters, creating an innovative life science and diagnostics leader with pioneering technologies and an industry-leading financial outlook. The agreement is structured as a tax-efficient Reverse Morris Trust transaction valued at approximately $17.5 billion.
Strategic and Financial Benefits
The companies expect that the transaction will create substantial shareholder value by:
- Bringing together complementary technologies to serve high-volume testing in attractive and regulated end-markets: The combined company will have best-in-class liquid chromatography, mass spectrometry, flow cytometry and diagnostic solutions, doubling Waters’ total addressable market to approximately $40 billion.
- Increasing annual recurring revenue in high-quality applications: Over 70% of the combined company’s revenue is expected to be recurring annually and over half of instrument revenue is expected to be recurring within a typical five- to 10-year replacement cycle.
- Accelerating Waters’ expansion into multiple high-growth adjacent end-markets:
- The bioseparations portfolio will expand by combining Waters’ chemistry expertise and BD’s biologics expertise to unlock new ways to separate large molecules and to drive growth in biologics and novel modalities with next-generation consumables.
- In bioanalytical characterization, Waters’ expertise in downstream high-volume applications and its established Empower™ informatics platform are well-positioned to deploy BD’s flow cytometry and PCR technologies into large molecule QA/QC.
- BD’s regulatory expertise and established presence in clinical and diagnostic settings are expected to drive enhanced market access, improved service support, accelerated menu expansion and automation for multiplex diagnostics using LC-MS technologies from Waters.
- Applying Waters’ proven execution model to unlock the full potential of BD’s Biosciences & Diagnostic Solutions business: Waters will systematize execution across instrument replacement, service plan attachment, e-commerce adoption and new product launches.
- Delivering substantial cost and revenue synergies: The transaction is expected to create approximately $200 million of cost synergies by year three post-closing and approximately $290 million of revenue synergies by year five, resulting in approximately $345 million of annualized EBITDA synergies by 2030.
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- Cost synergies are expected to be driven primarily by optimization in manufacturing, supply chain and SG&A while maintaining a strong commitment to R&D and commercial investments.
- Revenue synergies are expected to be derived from commercial excellence, accelerating expansion into high-growth adjacencies and realizing cross-selling opportunities.
- Providing an industry-leading pro forma growth outlook with rapid adjusted EPS accretion: The combined company is expected to generate pro forma revenue of approximately $6.5 billion and approximately $2.0 billion in pro forma adjusted EBITDA for calendar year 2025. On a pro forma basis, the combination is expected to deliver mid-to-high single-digit revenue growth and mid-teens adjusted EPS growth on an annualized basis between 2025 and 2030.
By 2030, the pro forma combined company is expected to have an industry-leading financial outlook with approximately $9 billion in revenue, $3.3 billion in adjusted EBITDA and an adjusted operating margin of 32%. The transaction is expected to be accretive to adjusted EPS in the first-year post-closing.
The transaction, which has been unanimously approved by the boards of directors of both Waters and BD, is structured as a Reverse Morris Trust, where BD’s Biosciences & Diagnostic Solutions business will be spun off to BD shareholders and simultaneously merged with a wholly owned subsidiary of Waters. BD’s shareholders are expected to own approximately 39.2% of the combined company, and existing Waters shareholders are expected to own approximately 60.8% of the combined company.
