Analyst: CareFusion Corp. Deal Offers 'Good, Not Great' Returns For Becton

Becton, Dickinson and Co.'s BDX plan to pay $12 billion for CareFusion Corp. CFN offers "good but not great" potential returns and a plausible strategic rationale, an analyst said Monday. Becton has "built a strong franchise" with products aimed at reducing infections from needle injections and CareFusion's product line centered on infusions via needless ports "provides the opportunity to leverage that message," Morgan Stanley's David R. Lewis said in a note. The deal also helps expedite Becton's entry into medical management and its integration of drugs and medical devices, Lewis added. But acquiring Carefusion is by far the largest deal Becton has attempted and it may weigh on the company's growth. Becton has targeted sales growth rate of 5 percent, and earnings growth of 10 percent. while CarFfusion has only managed to grow in the low single digits recently. Further, both companies obtain a much of their cash flow outside the U.S. and tax laws make access to that for business investment costly. "Investors may question why BD is pursuing a U.S.-centric, cash-trapped and capital intensive business," Lewis said. Morgan Stanley, which is serving as an advisor to CareFusion in the deal, offered no rating Monday. Becton closed Monday up nearly 8 percent at $124.98 a share; CareFusion was up nearly 23 percent at $56.75.