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M&A Activity Likely to Pick Up for Medical-Technology Firms

Becton Dickinson, Cardinal Health, and Abbott are all on track to make acquisitions.

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Julie Utterback: Medical-technology firms are dipping their toes back into M&A waters after a brief drought recently. In stark contrast to the first quarter when there was no issuance related to acquisitions in the entire healthcare industry as firms grappled with uncertainty around recent ACA repeal and replacement efforts, we expect significant acquisition-related debt issuance from med-tech firms in the next few quarters.

In the largest M&A event, BBB+ rated Becton Dickinson agreed to acquire A+ rated C.R. Bard for about $24 billion. Becton plans to borrow $10 billion to fund this transaction, which will push leverage up to the mid-4s from around 3 times recently. Because of this planned combination, which is expected to close this fall, ratings on both companies are Under Review Negative.

Julie Utterback does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.