Waters, BD’s Biosciences & Diagnostic Solutions business to combine

Waters Corporation (WAT) and BD (BDX) announced a definitive agreement to combine BD’s Biosciences & Diagnostic Solutions business with Waters. The agreement is structured as a tax-efficient Reverse Morris Trust transaction valued at approximately $17.5B. 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. Increasing annual recurring revenue in high-quality applications. Delivering substantial cost and revenue synergies: The transaction is expected to create approximately $200M of cost synergies by year three post-closing, and approximately $290M of revenue synergies by year five, resulting in approximately $345M of annualized EBITDA synergies by 2030. 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. 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 $9B in revenue, $3.3B 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. BD will also receive a cash distribution of approximately $4B prior to completion of the combination, subject to adjustment for cash, working capital, and indebtedness. The transaction is expected to be generally tax-free for U.S. federal income tax purposes to BD and BD’s shareholders. Waters is expected to assume approximately $4B of incremental debt, which would result in a net-debt-to-adjusted EBITDA leverage ratio for the combined company of 2.3x at closing. The transaction is expected to close around the end of the first quarter of calendar year 2026, subject to receipt of required regulatory approvals, Waters shareholder approval, and satisfaction of other customary closing conditions. Upon closing of the transaction, Udit Batra, Ph.D., Waters President and CEO, will lead the new entity, and Amol Chaubal will serve as SVP and Chief Financial Officer. Executives from both companies will serve in key leadership roles to be announced at a later date. Up to two BD designees will join the Waters Board of Directors upon closing. The combined company will continue to operate under the Waters name and retain its listing on the New York Stock Exchange under the ticker symbol WAT.