Shares of medical equipment maker Becton, Dickinson and Co. and rival CareFusion both bounced above their 52-week highs Monday before markets opened and a day after the companies announced their $12.2 billion combination.
Becton Dickinson said Sunday it will spend $58 per share in cash and stock to buy CareFusion in a deal expected to close in the first half of 2015. That represents a 26 percent premium to CareFusion's closing price of $46.17 on Friday, before the deal was announced.
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The deal stunned William Blair analyst Brian Weinstein, who said in a research note that he usually describes Becton, Dickinson, or BD, as "a slow moving ship that is ever so slowly steaming across the ocean and rarely deviates from its path."
"But that does not mean doing something out of character is a bad thing, especially when a deal appears to make as much strategic and financial sense as this one does," Weinstein wrote.
Stifel analyst Rick Wise also said in a separate note that he also had a positive initial reaction to the deal, which creates "an even more substantial" combination with a unique product portfolio.
Both companies have focused recent development efforts on technology to reduce medication errors and other patient safety problems. BD, based in Franklin Lakes, New Jersey said the merger should result in $250 million in savings by 2018.
BD shares were up 8.3 percent, or $9.60, to $125.44 in premarket trading, while San Diego-based CareFusion climbed more than 24 percent, or $11.13, to $57.30.