BD’s diabetes spinoff embecta gets board OK (updated)

Listen to this article

Becton, Dickinson and Co.’s board of directors approved the company’s diabetes spinoff, and set a date of April 1 for the move.

The announcement of Embecta Corp.’s approval came Feb. 1, along with a declared pro rata distribution of all outstanding shares of embecta common stock to BD shareholders.

The board voted unanimously to approve the spinoff. Upon completion, embecta will be an independent, publicly traded company and BD will retain no ownership interest.

The separation, according to the board, is consistent with the Franklin Lakes-based company’s growth strategy, allowing it to focus on core innovation priorities. The move will also amplify embecta’s ability to attract capital and talent, and allocate resources to its unique business development.

In a statement, Devdatt “Dev” Kurdikar, who will serve as chief executive officer of embecta upon completion of the spinoff, characterized the approval as a significant milestone.

BD announced leadership appointments for the new company, and unveiled its name, this past December. The spinoff was announced in May 2021.

“Since the announcement of our intention to spin off the diabetes care business, teams across BD have been working diligently to prepare for a successful separation of the two companies, and the board is pleased with their progress and satisfied that embecta is ready to serve its customers and drive higher growth as an independent organization,” said BD Chairman and CEO Tom Polen in a prepared statement. “We expect both BD and embecta to drive greater long-term value for shareholders while delivering impactful solutions that improve the future of health care.”

The distribution of shares of embecta common stock will be made to BD shareholders of record as of close of business on March 22, the record date for the spinoff, according to BD. The distribution is expected to be completed at 12:01 a.m. EST on April 1, subject to the satisfaction or waiver of conditions to the distribution described in embecta’s registration statement on Form 10.

BD will distribute one share of embecta common stock for every five common shares of BD outstanding as of the record date. Shareholders will receive cash in lieu of fractional shares of embecta common stock, BD said.

Embecta expects to begin trading on a “regular way” basis on April 1; it has applied to have its common stock listed on NASDAQ under ticker symbol EMBC.

A previously issued private letter from the Internal Revenue Service ruled that BD’s contribution of assets of the diabetes care business to the spinoff, and the distribution of embecta common stock to BD shareholders, will qualify as a tax-free transaction, according to BD’s announcement.

Editor’s note: A prior version of this story indicated the spinoff of BD’s Diabetes Care business was first announced in May 2020; it was announced in May 2021; the story was updated at 7:25 a.m. EST on April 1, 2022.