Bard shareholder looks to scuttle $24B merger with BD

A shareholder of C.R. Bard (NYSE:BCR) sued yesterday to stop a $24 billion merger with Becton Dickinson (NYSE:BDX), arguing that the price tag is too low and that the sale process was flawed and seeking class-action status for the suit.

Plaintiff Richard Maser filed the lawsuit in the U.S. District Court for New Jersey, seeking to block the deal until the companies disclose more facts about their negotiations. Maser alleged that the agreement’s “no solicitation” clause “prohibits the company or the individual defendants from taking any affirmative action to obtain a better deal for Bard shareholders.”

The deal also gives Franklin Lakes, N.J.-based BD an inside look at potential competing bids and extra time to come up with a counter-offer, the lawsuit alleged.

“The non-solicitation and matching rights provisions essentially ensure that a superior bidder will not emerge, as any potential suitor will undoubtedly be deterred from expending the time, cost and effort of making a superior proposal while knowing that BD can easily foreclose a competing bid. As a result, these provisions unreasonably favor BD, to the detriment of Bard’s public shareholders,” according to the complaint, which also noted that the $750 million breakup fee also stifles the chances for competing bids.

And a “fiduciary out” provision limits Murray Hill, N.J.-based Bard’s ability to back out of an unfavorable deal, Maser alleged.

Anatomy of a deal

According to the suit, the saga began in the spring of 2016, when BD’s senior management starting reviewing potential M&A targets, Bard among them. In January of this year BD CEO Vincent Forlenza approached Bard CEO Timothy Ring to indicate BD’s interest, after BD’s directors OK’d a $300-per-share offer. Ring rebuffed Forlenza at their Jan. 26 meeting and relayed BD’s solicitation to his board the next day; by Feb. 8 the $300-per-share bid had been formally submitted and duly rejected as too low, according to the suit.

In March BD approved a $312-per-share offer that included spots on its board for an unspecified number of Bard directors. That offer also would have Bard operated as its own division in BD, according to the complaint. Bard once again shot that bid down as too low but approved continued negotiations and the commencement of the due diligence process. By the end of the month BD had raised its bid to $314 per share; on March 29, according to the suit, Bard’s board mulled for the 1st time whether to solicit other offers but decided not to. The board also set its threshold at $317 per share; Ring then relayed that to Forlenza, who allegedly indicated that BD could meet that price.

After some dithering over the size of the kill fee and other terms of the offer, the companies shook hands on a deal April 22 and made the deal public the next day, according to the lawsuit, which seeks damages and legal fees as well as a halt to the deal.

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