BECTON, DICKINSON AND COMPANY (NYSE:BDX) Files An 8-K Entry into a Material Definitive Agreement

BECTON, DICKINSON AND COMPANY (NYSE:BDX) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01 Entry into a Material Definitive Agreement.

Term Loan Facility
On May 12, 2017, Becton, Dickinson and Company (the Company)
entered into a Three-Year Term Loan Agreement (the Term Loan
Agreement), by and among the Company, as borrower, Citibank,
N.A., as administrative agent (the Administrative Agent), and the
lenders and issuers of letters of credit party thereto that
provides for a $2.25 billion term loan facility (the Term Loan
Facility). Proceeds of the Term Loan Facility may be used only to
pay for (i) a portion of the cash consideration due in connection
with the Companys previously announced and currently pending
acquisition of C. R. Bard, Inc., a New Jersey corporation (Bard),
to an agreement and plan of merger, dated April 23, 2017, by and
among the Company, Bard and Lambda Corp., a New Jersey
corporation and wholly owned subsidiary of the Company (the
Merger), and the financing transactions associated with the
Merger (together with the Merger, the Transactions) and (ii) the
fees and expenses associated with the Transactions.
Under the Term Loan Agreement, Citibank, N.A. will act as
administrative agent; Citigroup Global Markets Inc., The Bank of
Tokyo-Mitsubishi Ufj, Ltd., BNP Paribas Securities Corp. and
JPMorgan Chase Bank, N.A. will act as joint lead arrangers and
joint bookrunners; The Bank of Tokyo-Mitsubishi Ufj, Ltd., BNP
Paribas Securities Corp. and JPMorgan Chase Bank, N.A. will act
as syndication agents; and Barclays Bank PLC, Morgan Stanley
Senior Funding Inc., Wells Fargo National Association and The
Bank of Nova Scotia will act as documentation agents.
The Term Loan Facility will be unsecured. The loans under the
Term Loan Facility will have an interest rate equal to either the
Eurodollar rate, plus a margin of 112.5 to 200 basis points, or a
base rate, plus a margin of 12.5 to 100 basis points. The
applicable margin will be determined based on the credit ratings
of the Companys then-current long-term senior unsecured,
unguaranteed debt securities.
The covenants in the Term Loan Agreement are the same as those in
the Companys existing Five Year Credit Facility (the Existing
Credit Facility), dated as of January 29, 2016, by and among the
Company, Citibank, N.A., as administrative agent, and the lenders
party thereto. The financial covenants in the Term Loan Agreement
require the Company to have (i) a ratio of consolidated EBITDA
(as defined in the Term Loan Agreement) to interest expense of
not less than 4.00:1.00 as of the last day of each fiscal quarter
and (ii) a ratio of Debt (as defined in the Term Loan Agreement)
to EBITDA of no more than, as of the last day of each fiscal
quarter following the closing of the Term Loan Facility, (1)
6.00:1:00 from the closing of the Term Loan Facility until and
including the first fiscal quarter ended thereafter, (2)
5.75:1.00 for the subsequent four fiscal quarters thereafter, (3)
5.25:1.00 for the subsequent four fiscal quarters thereafter and
(4) 4.50:1.00 thereafter. The Term Loan Agreement also contains
covenants that restrict the Company in respect of, among other
things, mergers and consolidations, sales of all or substantially
all assets, incurrence of liens, change in nature of business and
transactions with affiliates. The Term Loan Agreement is subject
to acceleration upon the occurrence of an event of default,
including cross-default with regard to indebtedness of the
Company or its subsidiaries in excess of $200 million in the
aggregate; failure to make a payment on other indebtedness of the
Company or its subsidiaries in an aggregate principal outstanding
amount of at least $200 million; change of control (as defined in
the Term Loan Agreement); entry of judgment or order to pay of
$200 million or more which is not stayed; the occurrence of
certain Employee Retirement Income Security Act of 1974 or
bankruptcy events; failure to make payments under the Term Loan
Facility when due; breach of representations and warranties or
covenants under the Term Loan Facility; and invalidity of loan
documents.
Borrowing under the Term Loan Agreement is subject to certain
conditions precedent, including, among other conditions, the
consummation of the Merger in accordance with the Merger
Agreement; the absence since December 31, 2016 of undisclosed
Bard material adverse effects (as defined in the Term Loan
Agreement); the delivery of certain information, including
financial information, to the Administrative Agent; the accuracy
of certain representations and warranties; and the absence of
certain defaults or events of default. The loans under the Term
Loan Facility will be due and payable within three years of
borrowing.
The descriptions of the provisions of the Term Loan Agreement are
summary in nature and are qualified in their entirety by
reference to the full and complete terms of the Term Loan
Agreement, which is filed herewith as Exhibit 10.1.
Some of the agents and lenders under the Term Loan Agreement and
certain of their affiliates have engaged, and in the future may
engage, in investment banking transactions, including securities
offerings, and in general financing and commercial banking
transactions with, and the provision of services to, the Company
and its affiliates in the ordinary course of business and
otherwise for which they have received, and will in the future
receive, customary fees.
Revolving Credit Facility
On May 12, 2017, the Company entered into a Credit Agreement (the
Credit Agreement) with Citibank, N.A., as administrative agent,
and the lenders named in the Credit Agreement.
The effectiveness of commitments under the Credit Agreement is
subject to certain conditions precedent, including, among other
conditions, the consummation of the Merger in accordance with the
Merger Agreement; the absence since December 31, 2016 of
undisclosed Bard material adverse effects (as defined in the
Credit Agreement); the delivery of certain information, including
financial information, to the Administrative Agent; and the
termination of the Existing Credit Agreement.
The Credit Agreement is a senior unsecured revolving credit
facility that provides the Company with $2.25 billion of
financing, including a $100 million letter of credit subfacility,
and expires in May 2022. The credit facility provides that the
Company may, subject to additional commitments made by the
lenders, access up to an additional $500 million of financing
through the facility, for a maximum aggregate commitment under
the facility of up to $2.75 billion. Borrowings under the credit
facility may be used for general corporate purposes and to
redeem, repurchase or defease Bards existing 1.375% notes due
2018. Interest rates on borrowings under the Credit Agreement
will be based on prevailing interest rates and the Companys
credit ratings, as described in the Credit Agreement. The Credit
Agreement contains customary representations and affirmative and
negative covenants. The financial covenants in the Credit
Agreement require the Company to have (i) a ratio of consolidated
EBITDA (as defined in the Credit Agreement) to interest expense
of not less than 4.00:1.00 as of the last day of each fiscal
quarter and (ii) a ratio of Debt (as defined in the Term Loan
Agreement) to EBITDA of no more than, as of the last day of each
fiscal quarter following the closing of the Term Loan Facility,
(1) 6.00:1:00 from the effective date of the Term Loan Facility
until and including the first fiscal quarter ended thereafter,
(2) 5.75:1.00 for the subsequent four fiscal quarters thereafter,
(3) 5.25:1.00 for the subsequent four fiscal quarters thereafter,
(4) 4.50:1.00 for the subsequent four fiscal quarters thereafter,
(5) 4.00:1.00 for the subsequent four fiscal quarters thereafter
and (6) 3.75:1.00 thereafter. The Credit Agreement also contains
customary events of default (including non-payment of principal
or interest and breaches of covenants). If any event of default
occurs and is not cured within the applicable grace period, the
outstanding loans under the facility may be accelerated by
lenders holding a majority of the commitments under the Credit
Agreement and the lenders commitments under the Credit Agreement
may be terminated.
The descriptions of the provisions of the Credit Agreement are
summary in nature and are qualified in their entirety by
reference to the full and complete terms of the Credit Agreement,
which is filed herewith as Exhibit 10.2.
Some of the agents and lenders under the Credit Agreement and
certain of their affiliates have engaged, and in the future may
engage, in investment banking transactions, including securities
offerings, and in general financing and commercial banking
transactions with, and the provision of services to, the Company
and its affiliates in the ordinary course of business and
otherwise for which they have received, and will in the future
receive, customary fees.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information set forth above under Item 1.01 of this report is
hereby incorporated by reference into this Item 2.03.
Item 3.03 Material Modification to Rights of Security Holders.
In connection with the Depositary Shares Offering by the Company
(as defined and described under Item 8.01 below), on May 15,
2017, the Company filed a Certificate of Amendment (the
Certificate of Amendment) with the State of New Jersey Department
of Treasury to establish the preferences, limitations and
relative rights of its 6.125% Mandatory Convertible Preferred
Stock, Series A, liquidation preference $1,000.00 per share, par
value $1.00 per share (the Mandatory Convertible Preferred
Stock). The Certificate of Amendment became effective upon
filing.
Subject to certain exceptions, so long as any share of Mandatory
Convertible Preferred Stock remains outstanding, no dividend or
distribution will be declared or paid on the Common Stock (as
defined below) or any other shares of junior stock; no dividend
or distribution will be declared or paid on the Companys parity
stock; and no Common Stock, junior stock or parity stock will be,
directly or indirectly, purchased, redeemed or otherwise acquired
for consideration by the Company or any of its subsidiaries
unless all accumulated and unpaid dividends for all past dividend
periods on the Mandatory Convertible Preferred Stock have been or
are contemporaneously declared and paid in full (or have been
declared and a sufficient sum of cash and/or number of shares of
Common Stock for the payment of such dividends has been set aside
for the benefit of the holders of shares of the Mandatory
Convertible Preferred Stock on the applicable regular record
date).
Unless converted or redeemed earlier, each share of Mandatory
Convertible Preferred Stock will convert automatically on the
mandatory conversion date of May 1, 2020 (subject to postponement
in certain cases), into between 4.7214 and 5.6657 shares of
Common Stock, subject to customary anti-dilution adjustments. The
number of shares of Common Stock issuable upon conversion will be
determined based on the average volume weighted average price per
share of Common Stock over the 20 consecutive trading day period
commencing on, and including, the 22nd scheduled trading day
prior to May 1, 2020.
In addition, upon the Companys voluntary or involuntary
liquidation, winding-up or dissolution, each holder of Mandatory
Convertible Preferred Stock will be entitled to receive out of
the Companys assets available for distribution to its
stockholders, subject to rights of its creditors, before any
payment or distribution is made to holders of junior stock
(including Common Stock), payment in full of the amount of $1,000
per share of the Mandatory Convertible Preferred Stock, plus an
amount equal to any accumulated and unpaid dividends, whether or
not declared, on such shares to (but not including) the date
fixed for liquidation, dissolution or winding-up.
The foregoing description of the terms of the Mandatory
Convertible Preferred Stock, including such restrictions, is
qualified in its entirety by reference to the Certificate of
Amendment, a copy of which is filed as Exhibit 3.1 hereto, and is
incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws;
Change in Fiscal Year
On May 15, 2017, the Company filed the Certificate of Amendment
with the State of New Jersey Department of Treasury to establish
the preferences, limitations and relative rights of the Mandatory
Convertible Preferred Stock. The Certificate of Amendment became
effective upon filing, and a copy is filed as Exhibit 3.1 hereto,
and is incorporated herein by reference.
Item 8.01. Other Events.
Offering of Common Stock
On May 10, 2017, the Company entered into an underwriting
agreement (the Common Stock Underwriting Agreement) with
Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan
Stanley Co. LLC and Wells Fargo Securities, LLC, as
representatives of the several underwriters listed in Schedule II
thereto (the Common Stock Underwriters), to which the Company
agreed to issue and sell to the Common Stock Underwriters in a
registered public offering (the Common Stock Offering) an
aggregate of 14,025,000 shares of the Companys common stock, par
value $1.00 per share (Common Stock), including 1,275,000
additional shares of Common Stock to the Common Stock
Underwriters exercise of their option to purchase additional
shares in full, at the public offering price, less the
underwriting discount. The Common Stock Offering was made to a
prospectus supplement to the Companys automatic shelf
registration statement on Form S-3ASR (File No. 333-206020) (the
Registration Statement). The Common Stock Offering closed on May
16, 2017.
The foregoing description of the terms and conditions of the
Common Stock Underwriting Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by
reference to, the full text of the Common Stock Underwriting
Agreement, a copy of which is filed as Exhibit 1.1 hereto, and is
incorporated herein by reference.
Offering of Depositary Shares
On May 10, 2017, the Company entered into an underwriting
agreement (the Depositary Shares Underwriting Agreement) with
Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan
Stanley Co. LLC and MUFG Securities Americas Inc., as
representatives of the several underwriters listed in Schedule II
thereto (the Depositary Share Underwriters), to which the Company
agreed to issue and sell , in a registered public offering
(Depositary Shares Offering) to the Depositary Share Underwriters
49,500,000 depositary shares (the Depositary Shares), each
representing a 1/20th interest in a share of the Companys
Mandatory Convertible Preferred Stock, including 4,5000,000
Depositary Shares to the Depositary Share Underwriters exercise
of their option to purchase additional Depositary Shares in full
to cover overallotments, at the public offering price, less the
underwriting discount. The Depositary Shares Offering was made to
a prospectus supplement to the Registration Statement. The
Depositary Shares Offering closed on May 16, 2017.
The foregoing description of the terms and conditions of the
Depositary Shares Underwriting Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by
reference to, the full text of the Depositary Shares Underwriting
Agreement, a copy of which is filed as Exhibit 1.2 hereto, and is
incorporated herein by reference.
FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K contains certain estimates and
other forward-looking statements within the meaning of the
federal securities laws, including Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward looking
statements generally are accompanied by words such as will,
expect, outlook anticipate, intend, plan, believe, seek, see,
will, would, target, or other similar words, phrases or
expressions and variations or negatives of these words.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, such as statements
regarding the estimated or anticipated future results of BD,
and of the combined company following BDs proposed acquisition
of Bard, the anticipated benefits of the proposed combination,
including estimated synergies, the expected timing of
completion of the transaction and other statements that are not
historical facts. These statements are based on the current
expectations of BD and Bard management and are not predictions
of actual performance.
These statements are subject to a number of risks and
uncertainties regarding BD and Bards respective businesses and
the proposed acquisition, and actual results may differ
materially. These risks and uncertainties include, but are not
limited to, (i) the ability of the parties to successfully
complete the proposed acquisition on anticipated terms and
timing, including obtaining required shareholder and regulatory
approvals, anticipated tax treatment, unforeseen liabilities,
future capital expenditures, revenues, expenses, earnings,
synergies, economic performance, indebtedness, financial
condition, losses, future prospects, business and management
strategies for the management, expansion and growth of the new
combined companys operations and other conditions to the
completion of the acquisition, (ii) risks relating to the
integration of Bards operations, products and employees into BD
and the possibility that the anticipated synergies and other
benefits of the proposed acquisition will not be realized or
will not be realized within the expected timeframe, (iii) the
outcome of any legal proceedings related to the proposed
acquisition, (iv) access to available financing for the
refinancing of BDs or Bards debt on a timely basis and
reasonable terms, (v) the ability to market and sell Bards
products in new markets, including the ability to obtain
necessary regulatory product registrations and clearances, (vi)
the loss of key senior management or other associates; the
anticipated demand for BDs and Bards products, including the
risk of future reductions in government healthcare funding,
changes in reimbursement rates or changes in healthcare
practices that could result in lower utilization rates or
pricing pressures, (vii) the impact of competition in the
medical device industry, (viii) the risks of fluctuations in
interest or foreign currency exchange rates, (ix) product
liability claims, (x) difficulties inherent in product
development, including the timing or outcome of product
development efforts, the ability to obtain regulatory approvals
and clearances and the timing and market success of product
launches, (xi) risks relating to fluctuations in the cost and
availability of raw materials and other sourced products and
the ability to maintain favorable supplier arrangements and
relationships, (xii) successful compliance with governmental
regulations applicable to BD, Bard and the combined company,
(xiii) changes in regional, national or foreign economic
conditions, (xiv) uncertainties of litigation, and (xv) other
factors discussed in BDs and Bards respective filings with the
Securities Exchange Commission.
The forward-looking statements in this document speak only as
of date of this document. BD and Bard undertake no obligation
to update any forward-looking statements to reflect events or
circumstances after the date hereof, except as required by
applicable laws or regulations.
IMPORTANT INFORMATION FOR INVESTORS
In connection with the proposed transaction, BD will file with
the SEC a registration statement on Form S4 that will constitute
a prospectus of BD and include a proxy statement of Bard. BD and
Bard also plan to file other relevant documents with the SEC
regarding the proposed transaction. INVESTORS ARE URGED TO READ
THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the
proxy statement/prospectus (if and when it becomes available) and
other relevant documents filed by BD and Bard with the SEC at the
SECs website at www.sec.gov. In addition, you will be able to
obtain free copies of these documents by phone, email or written
request by contacting the investor relations department of BD or
Bard at the following:
Becton, Dickinson and Company
C. R. Bard, Inc.
1 Becton Drive
730 Central Avenue
Franklin Lakes, New Jersey 07417
Murray Hill, 1 New Jersey 07974
Attn: Investor Relations
Attn: Investor Relations
1-(800)-284-6845
1-(800)-367-2273
PARTICIPANTS IN THE SOLICITATION
BD and Bard and their respective directors and executive officers
and other members of management and employees may be deemed to be
participants in the solicitation of proxies in respect of the
proposed transaction. Information about BDs directors and
executive officers is available in BDs proxy statement dated
December 15, 2016, for its 2017 Annual Meeting of Shareholders.
Information about Bards directors and executive officers is
available in Bards proxy statement dated March 15, 2017, for its
2017 Annual Meeting of Stockholders. Other information regarding
the participants in the proxy solicitation and a description of
their direct and indirect interests, by security holdings or
otherwise, will be contained in the proxy statement/prospectus
and other relevant materials to be filed with the SEC regarding
the acquisition when they become available. Investors should read
the proxy statement/prospectus carefully when it becomes
available before making any voting or investment decisions. You
may obtain free copies of these documents from BD or Bard as
indicated above.
NO OFFER OR SOLICITATION
This Current Report on Form 8-K shall not constitute an offer to
sell or the solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any
such jurisdiction. No offering of securities shall be made except
by means of a prospectus meeting the requirements of Section 10
of the U.S. Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No.
Description of Exhibit
1.1
Underwriting Agreement, dated as of May 10, 2017, by and
among Becton, Dickinson and Company and Citigroup Global
Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley
Co. LLC and Wells Fargo Securities, LLC, as representatives
of the several underwriters, with respect to the Common
Stock Offering.
1.2
Underwriting Agreement, dated as of May 10, 2017, by and
among Becton, Dickinson and Company and Citigroup Global
Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley
Co. LLC and MUFG Securities Americas Inc., as
representatives of the several underwriters, with respect
to the Depositary Shares Offering.
3.1
Certificate of Amendment of the Companys Restated
Certificate of Incorporation, filed with the State of New
Jersey Department of Treasury and effective May 15, 2017
(incorporated by reference to Exhibit 4.1 of the
registrants registration statement on Form 8-A filed on May
16, 2017).
4.1
Form of Certificate for the 6.125% Mandatory Convertible
Preferred Stock, Series A (incorporated by reference to
Exhibit 4.2 of the registrants registration statement on
Form 8-A filed on May 16, 2017).
4.2
Deposit Agreement, dated as of May 16, 2017, among Becton,
Dickinson and Company and Computershare Inc. and
Computershare Trust Company, N.A., acting jointly as
depositary and Computershare Trust Company, N.A., acting as
Registrar and Transfer Agent, on behalf of the holders from
time to time of the depositary receipts described therein
(incorporated by reference to Exhibit 4.3 of the
registrants registration statement on Form 8-A filed on May
16, 2017).
4.3
Form of Depositary Receipt for the Depositary Shares
(incorporated by reference to Exhibit 4.4 of the
registrants registration statement on Form 8-A filed on May
16, 2017).
5.1
Opinion of Gary DeFazio, Senior Vice President, Corporate
Secretary and Associate General Counsel of Becton,
Dickinson and Company, relating to the Common Stock
Offering.
5.2
Opinion of Gary DeFazio, Senior Vice President, Corporate
Secretary and Associate General Counsel of Becton,
Dickinson and Company, relating to the Depositary Shares
Offering.
5.3
Opinion of Skadden, Arps, Slate, Meagher Flom LLP.
10.1
Three-Year Term Loan Agreement, dated as of May 12, 2017,
by and among Becton, Dickinson and Company, the lenders
party thereto and Citibank, N.A., as administrative agent.
10.2
Credit Agreement, dated as of May 12, 2017, by and among
Becton, Dickinson and Company, the banks and issuers of
letters of credit party thereto and Citibank, N.A., as
administrative agent.
23.1
Consent of Gary DeFazio, Senior Vice President, Corporate
Secretary and Associate General Counsel of Becton,
Dickinson and Company (included in Exhibit 5.1).
23.2
Consent of Gary DeFazio, Senior Vice President, Corporate
Secretary and Associate General Counsel of Becton,
Dickinson and Company (included in Exhibit 5.2).
23.3
Consent of Skadden, Arps, Slate, Meagher Flom LLP (included
in Exhibit 5.3).


About BECTON, DICKINSON AND COMPANY (NYSE:BDX)

Becton, Dickinson and Company (BD) is a global medical technology company engaged in the development, manufacture and sale of a range of medical supplies, devices, laboratory equipment and diagnostic products. The Company operates through two segments: BD Medical and BD Life Sciences. The BD Medical segment produces an array of medical technologies and devices that are used to help improve healthcare delivery in a range of settings. BD Medical consists of various business units, including diabetes care, medication and procedural solutions, medication management solutions and pharmaceutical systems. The BD Life Sciences segment provides products for the safe collection and transport of diagnostics specimens, and instruments and reagent systems to detect a range of infectious diseases, healthcare-associated infections and cancers. The Company’s BD Life Sciences segment consists of various business units, including preanalytical systems, diagnostic systems and biosciences.

BECTON, DICKINSON AND COMPANY (NYSE:BDX) Recent Trading Information

BECTON, DICKINSON AND COMPANY (NYSE:BDX) closed its last trading session down -2.42 at 182.75 with 1,863,840 shares trading hands.

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