The fevered pitch of mergers and acquisitions activity in the health care sector is continuing with news out Sunday afternoon that Becton Dickinson (NYSE: BDX) will acquire rival CareFusion (NYSE: CFN) in a deal worth $12.2 billion in cash and stock.
BDX will pay $58 per share for CareFusion, an almost 26% premium to where the latter’s shares closed last Friday. The deal is expected to be completed in the first half of 2015, according to a statement issued by the companies.
In terms of exchange traded funds, news of the Becton Dickinson/CareFusion marriage turns attention to the iShares U.S. Medical Devices ETF (NYSEArca: IHI). Becton Dickinson is IHI’s seventh-largest holding with a weight of almost 4.6%. CareFusion accounts for 2.2% of IHI’s weight. Based on Friday’s closing market values, the two companies have a combined market value of about $31.6 billion, just above Stryker’s (NYSE: SYK) $31.2 billion. Stryker is IHI’s sixth-largest holding. [Medical Devices ETF Thwarts Obamacare]
This is not IHI’s first dalliance with big takeover news this year. The ETF is up nearly 11% year-to-date due in part to takeover speculation and announced deals.
One of those announced deals emerged in June when Medtronic (NYSE: MDT) said it would acquire Covidien (NYSE: COV) for $40 billion. Those stocks combine for nearly 18% of IHI’s weight. [Medical Device Marriage Helps This ETF]