Becton Dickinson Acquisition of C.R. Bard - Frequently Asked Questions for Shareholders

This document provides general answers to some common questions that former shareholders of C.R. Bard, Inc. (“Bard”) may have in conjunction with the recent acquisition by Becton, Dickinson and Company (“BD”). For further details on the transaction, you should review the Proxy Statement/Prospectus filed on June 30, 2017 by BD with the SEC, available on the BD Investor Relations website. The brief summary descriptions of certain U.S. federal income tax considerations below are general in nature, are based on the U.S. federal tax law in effect on December 31, 2017, and do not constitute tax advice. To get answers for your specific situation, you should consult your tax and/or financial advisor.

The following terms are used in this document:

Registered shareholders: shareholders whose Bard shares were held directly, in the name of the shareholder, on the share register maintained by Computershare (also referred to as the paying agent), the transfer agent for both BD and Bard.

Beneficial shareholders: shareholders whose Bard shares were held indirectly through a bank, broker or other nominee.

Book Entry: shares held in book-entry (or electronic) form.

Closing Date: December 29, 2017, the date of the consummation of the transaction.

Code: the Internal Revenue Code of 1986, as amended.

  1. Why did BD acquire Bard? What is the strategic rationale?
    • The combination of BD and Bard creates a highly differentiated medical technology company focused on delivering innovative healthcare solutions to improve clinical and economic outcomes.
    • This transaction will create new opportunities to build on BD’s leadership position in medication management and infection prevention with an expanded offering of solutions across the care continuum.
    • Bard’s strong product portfolio and innovation pipeline increases BD’s opportunities in fast-growing clinical areas, including peripheral vascular therapy, oncology, and bio-surgery.
    • BD’s leading global capabilities and infrastructure will further accelerate the combined company’s growth outside of the U.S., creating more opportunities for patients and clinicians around the world to benefit from BD’s and Bard’s product technology.
    • The financially compelling combination of BD and Bard is immediately accretive -- and expected to generate high single-digit accretion to adjusted earnings per share in fiscal year 2019 -- and is expected to create meaningful long-term value for shareholders
  2. When was this transaction first announced and when did it close?
  3. On April 23, 2017, BD and Bard announced a definitive agreement under which BD would acquire Bard for $317.00 per Bard common share in cash and stock, or a total of $24 billion, to create a highly-differentiated medical technology company uniquely positioned to improve both the process of care and the treatment of disease for patients and healthcare providers. The agreement had been unanimously approved by the Boards of both companies.

    The acquisition of Bard by BD, through a merger transaction, was consummated on December 29, 2017. Upon completion of the acquisition, Bard became a wholly owned subsidiary of BD. For U.S. federal income tax purposes, shareholders of Bard were treated as having exchanged their shares in the merger before market opening on the Closing Date.

  4. What will I receive for my Bard common stock as a result of the transaction?
  5. Each share of Bard held in book-entry form immediately prior to the transaction has been cancelled and converted into the right to receive: $222.93 in cash, without interest and less any applicable withholding taxes, and 0.5077 of a share of BD common stock and cash in lieu of any fractional shares. This was the approved conversion per the agreement between BD and Bard and the Bard shareholders’ vote on August 8, 2017.

    For Bard registered shareholders, BD has appointed Computershare Trust Company N.A. as paying agent for payment of the merger consideration.

      For Bard registered shareholders who hold Bard stock certificates or a mix of Bard stock certificates and book-entry shares, information concerning the exchange of Bard shares for the per share merger consideration is being mailed to the holder of record of the certificated Bard shares. This information will outline the steps to be taken to obtain the merger consideration. These registered shareholders do not need to take any action regarding their shares until contacted by the paying agent.

      For Bard registered shareholders who hold Bard stock solely in book-entry format, Computershare Trust Company N.A. will debit all book-entry Bard shares in the accounts of holders of record and credit the appropriate number of book-entry BD shares to each holder, and will also make payment of the cash consideration (less any applicable tax withholding) by mailing a check representing such amount to each such holder.

      For additional information, please contact Computershare Trust Company, N.A. at 1-877-498-8861 (within the U.S., its territories and Canada) or +1-781-575-2879 (outside the U.S., its territories and Canada).

    Beneficial shareholders of Bard who hold shares through a bank, brokerage firm or other nominee (in “street name”), should contact their bank, broker or nominee for further information about receiving the merger consideration.

  6. I would have liked to convert my Bard shares to BD shares rather than receive a combination of cash and BD shares, but wasn’t given the choice.
  7. Bard shareholders do not have the option to choose the form of consideration to be received. On August 8, 2017, a special meeting was held for Bard shareholders to consider and vote upon the proposed merger of Bard and BD. Bard shareholders approved the definitive merger agreement and the merger transaction, with approximately 99% of the shares voting were cast in favor of the proposal. For each share of Bard held, the approved conversion per the agreement between BD and Bard is $222.93 in cash, without interest and less any applicable withholding taxes, and 0.5077 of a share of BD common stock and cash in lieu of any fractional shares.

  8. What are the material U.S. federal income tax consequences to U.S. shareholders who surrendered shares of Bard common stock in the merger?

    The receipt of the merger consideration by U.S. holders in exchange for shares of Bard common stock pursuant to the merger will be treated as a taxable transaction for U.S. federal income tax purposes. In general, for U.S. federal income tax purposes, a U.S. holder who received the merger consideration in exchange for shares of Bard common stock pursuant to the merger will recognize a gain or loss in an amount equal to the difference, if any, between (1) the fair market value of the BD common stock as of the effective time of the merger plus the amount of cash received and (2) the U.S. holder’s adjusted tax basis in such Bard common shares.

    A U.S. holder’s aggregate tax basis in BD common stock received in the merger will equal the fair market value of the stock as of the effective time of the merger. The holding period of the BD common stock received in the merger will begin on the day after the merger.

    Notwithstanding the above, in certain circumstances, the receipt of the cash consideration by U.S. holders of Bard common stock that also actually or constructively own BD common stock may be subject to Section 304 of the Code if holders who own (including by attribution) 50% or more of the Bard common stock before the merger own (including by attribution), immediately after the merger, 50% or more of the BD common stock. If Section 304 of the Code applies to the cash consideration received in the merger, then instead of recognizing a gain or loss as described above in respect of such cash consideration, a U.S. holder may recognize dividend income up to the amount of such cash consideration if such holder’s receipt of the cash consideration is not “substantially disproportionate” with respect to such holder or is “essentially equivalent to a dividend” under the test set forth in Section 302 of the Code. In applying the above tests, a holder may, under constructive ownership rules, be deemed to own stock that is owned by other persons in addition to the stock actually owned by the holder. BD does not expect Section 304 of the Code to apply to the receipt by any holder of cash consideration in connection with the merger. Nevertheless, because the possibility of dividend treatment depends upon each holder’s particular circumstances, including the application of such constructive ownership rules, U.S. holders of Bard common stock that also actually or constructively own BD common stock should consult their tax advisors regarding the application of the foregoing rules to the particular circumstances, and any actions that may be taken to mitigate the potential application of the rules.

  9. What will be the tax basis of the new BD shares received at the time of closing?
  10. For U.S. federal income tax purposes, the tax basis of the shares of BD common stock issued in this transaction will generally be the fair market value of such stock at the closing. BD intends to use the closing price of $214.32 on December 28, 2017, the last trading day before the Closing Date, as the fair market value of the BD common stock issued in the merger.

  11. What are the tax implications for non-U.S. Bard shareholders?
  12. BD does not expect Section 304 of the Code to apply to the receipt by any holder of cash consideration in the merger and, accordingly, does not intend to withhold U.S. federal tax on any such payment as a result of the application of Section 304 of the Code.

    BD has not otherwise provided guidance about implications to non-U.S. holders. We would recommend any non-U.S. holders consult with their own tax advisors.

  13. What was the number of Bard shares outstanding by which the fair value of BD’s ordinary shares issued to Bard shareholders was based upon?
  14. The acquisition date fair value of BD’s ordinary shares issued to Bard shareholders was based on approximately 73.4 million of Bard’s shares outstanding, multiplied by the exchange ratio of 0.5077, and BD’s closing share price as of December 28, 2017 of $214.32 per common share. Refer to the calculation below:

    (in millions, except per share data)
    Total Bard shares outstanding73.4
    Conversion factor0.5077
    Shares of BD issued (par value $1.00)37.2
    Value per share of BD common stock as of December 28, 2017$142.29
    Fair value of BD stock issued in respect of outstanding Bard shares$ 7,982

  15. Is an IRS Form 8937 available for the transaction?
  16. Yes, the link to IRS Form 8937 and attachments can be found on the bd.com/investors website.

  17. Does the capital gains tax treatment apply to shares held within an IRA or a qualified retirement plan such as a 401(k) plan?
  18. No. In general, gains realized on shares of Bard common stock held within IRAs and qualified retirement plans are not subject to current U.S. federal income taxation.

  19. What about share buybacks? Are they now off the table?
    • Our focus for the near term post-close will be on deleveraging and the dividend, and we therefore expect to continue to suspend the share buyback program over the near term.
    • BD remains committed to its long tradition of growing the dividend. As BD’s primary cash priority going forward will be deleveraging, the Company will evaluate how fast to grow the dividend each year. The pace of growth is likely to be moderated over the deleverage period.