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Activist investor Starboard Value has taken a stake in Becton Dickinson and is pushing the $72bn medical technology company to sell its life sciences division, according to people familiar with the matter.
The hedge fund has met the group’s management team and sent a letter to the board imploring the company to sell or spin off the unit, which makes products used in clinical and research laboratories, said the people. The size of Starboard’s stake is unclear.
Becton Dickinson’s shares have underperformed rivals and the S&P 500 index in recent years, gaining just 4.4 per cent in the past year compared with a nearly 22 per cent rise in the S&P 500. Shares in Becton Dickinson jumped by as much as 3 per cent in pre-market trading after Starboard’s stake was revealed.
The New Jersey-based company is already working with advisers on plans for a potential spin-off of its life sciences division, which could fetch between $33bn and $35bn, based on the valuations of industry peers, separate people said. Bloomberg first reported Becton Dickinson hiring advisers.
Other shareholders have also begun agitating for Becton Dickinson’s management and board to spin out the life sciences division, but Starboard’s arrival on the company’s shareholder register is likely to add urgency to the process, according to the people. The unit generated $5.2bn, or around a quarter of Becton Dickinson’s total revenues, in the year to the end of September 2024.
Becton Dickinson declined to comment. Starboard did not immediately respond to requests for comment.
Analysts at investment banks have argued in recent months that Becton Dickinson would benefit from separating the unit. In December, Bank of America analysts wrote that the “sum of the parts is getting too wide to ignore” and that splitting the business from the rest of the group could lead to an increase of as much as 30 per cent in value.
Starboard, run by co-founder Jeff Smith, is among the most prominent activist investors on Wall Street. Some of its high-profile campaigns have targeted technology company Salesforce and Tinder parent Match Group. Starboard’s assets under management total more than $9bn.
Recently, the fund has built several positions in the healthcare sector. In October, Starboard unveiled a $1bn stake in pharmaceutical company Pfizer, which has suffered from a declining share price after developing one of the most successful Covid-19 vaccines.
The hedge fund also revealed in the same month its stake in Kenvue, the consumer health group behind Tylenol that was spun out of Johnson & Johnson. The activist investor later nominated five directors to the board.
Sprawling conglomerates including Honeywell and London-listed Smiths Group have grappled with shareholders demanding break-ups, with investors convinced that parts of the companies are worth more than the whole combined.
Becton Dickinson has split off business units before. The group spun out diabetes device maker Embecta in April 2022, but the company’s stock has struggled as a separate business, with its share price sinking about 60 per cent since the listing.
“We always evaluate our portfolio and we’re constantly looking at what creates the most shareholder value,” said Tom Polen, chair and chief executive of Becton Dickinson, at a conference in September in response to a question about whether the group would consider spinning out the unit.
“We always look and say . . . are we the best owner for this business? I mean, that’s the key question.”
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