Waters Corporation: A Path to Diversification via the Becton Diagnostics Merger

Waters Corp. has merged with Becton Dickinson's diagnostics business, becoming a diversified giant. The company's share price has seen a significant run, but it was not backed by fundamentals. The merger aims to expand Waters' presence in the diagnostics market and provide a broader range of products and services to customers. The company's financials are expected to benefit from the acquisition, with increased revenue and profitability.

Waters Corporation (NYSE: WAT) and Becton, Dickinson and Company (NYSE: BDX) have announced a definitive agreement to combine BD's Biosciences & Diagnostic Solutions business with Waters, creating an innovative life science and diagnostics leader. The transaction is structured as a tax-efficient Reverse Morris Trust, valued at approximately $17.5 billion [1].

The merger aims to expand Waters' presence in the diagnostics market and provide a broader range of products and services to customers. The combined company will have a total addressable market of approximately $40 billion, with 5-7% annual growth. The pro forma expected 2025 sales are approximately $6.5 billion, with adjusted EBITDA of approximately $2.0 billion [1].

The merger is expected to deliver substantial shareholder value through increased annual recurring revenue, accelerated expansion into high-growth adjacencies, and significant cost and revenue synergies. The transaction is anticipated to create approximately $345 million in annualized EBITDA synergies by 2030, with $200 million of cost synergies by year three and $290 million of revenue synergies by year five [1].

The combined company is expected to generate mid-to-high single-digit revenue growth and mid-teens adjusted EPS growth on an annualized basis between 2025 and 2030. By 2030, the pro forma combined company is expected to have an industry-leading financial outlook with approximately $9 billion in revenue, $3.3 billion in adjusted EBITDA, and an adjusted operating margin of 32% [1].

The merger is expected to close around the end of the first quarter of calendar year 2026, subject to receipt of required regulatory approvals, Waters shareholder approval, and satisfaction of other customary closing conditions [1].

References:
[1] Waters Corporation and BD Announce Definitive Agreement to Combine BD's Biosciences & Diagnostic Solutions Business with Waters. (July 14, 2025). Retrieved from https://investors.bd.com/news-events/press-releases/detail/892/waters-and-bds-biosciences-diagnostic-solutions-business-to-combine-creating-a-life-science-and-diagnostics-leader-focused-on-regulated-high-volume-testing