Zinger Key Points
- Bank of America analysts estimate that spinning off Becton Dickinson’s life sciences division could increase its value by up to 30%.
- Becton Dickinson previously spun off Embecta in April 2022, but the company’s stock has since declined by about 60%.
- Get Wall Street's Hottest Chart Every Morning
Activist investor Starboard Value has taken a stake in Becton, Dickinson and Company BDX and is pressing the $72 billion medical technology company to sell its life sciences division.
The hedge fund has met with Becton Dickinson's management and sent a letter to the board urging the divestiture of the unit, which supplies products for clinical and research laboratories. The size of Starboard's stake remains undisclosed.
Other shareholders have also begun advocating for the separation of the life sciences division, aligning with recent analyst reports suggesting that a spin-off could unlock significant value.
The Financial Times report writes that in December, Bank of America analysts noted that the disparity between Becton Dickinson's current valuation and its potential "sum of the parts" was becoming too substantial to ignore. They estimated that a split could boost the company's value by up to 30%.
In April 2022, Becton Dickinson spun off Embecta EMBC, a diabetes device maker, into a standalone entity.
In November, the company announced that it had decided to discontinue its insulin patch pump program and would initiate a restructuring plan.
In July, Embecta, a manufacturer of disposable insulin pen needles and syringes, said it is considering a potential sale following a significant drop in its share price since being spun off from health tech giant Becton, Dickinson.
In December, The Securities and Exchange Commission announced it had settled charges against Becton, Dickinson for repeatedly misleading investors about risks associated with its continued sales of its Alaris infusion pump and for overstating its income by failing to record the costs of fixing multiple software flaws with the pump. The company agreed to pay a $175 million civil penalty.
Last week, Starboard Value decided not to pursue a proxy battle with Pfizer Inc PFE.
Starboard announced that it built a $1 billion stake in the pharmaceutical giant in October. The activist investor was reportedly planning to push for changes at the company given the stock's recent underperformance.
Price Action: BDX stock is up 1.03% at $250.16 at last check Monday.
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