Becton Dickinson Acquisiton of CareFusion - Frequently Asked Questions for Shareholders

This document provides general answers to some common questions that shareholders of Becton, Dickinson and Company (BD) may have in connection with the recent acquisition of CareFusion Corporation (CareFusion). For further details on the transaction, you should review the Registration Statement on Form S-4 filed on March 26, 2015 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 March 30, 2015, 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 BD or CareFusion shares were held directly, in the name of the shareholder, on the share register maintained by Computershare (also referred to as the exchange agent), the transfer agent for both BD and CareFusion.
Beneficial shareholders: shareholders whose BD or CareFusion. shares were held indirectly through a bank, broker or other nominee.
Closing Date: March 17, 2015, the date of the consummation of the transaction.

  1. Why did BD acquire CareFusion. What is the strategic rationale?
    • Enables BD to become a global leader in medication management and patient safety solution. It accelerates BD’s strategy to deliver integrated medication management solution and smart devices, from drug preparation in the pharmacy, to dispensing on the hospital floor, administration to the patient, and subsequent monitoring.
    • Provides BD with the ability to improve quality of patient care and reduce healthcare costs by addressing unmet needs in hospital, hospital pharmacies and alternate sites of care to increase efficiencies, reduce medication administration errors and improve patient and healthcare worker safety.
    • BD will also have strong positions in patient safety to maximize outcomes in infection prevention, respiratory care, and acute care procedural effectiveness.
    • Creates significant opportunities across developed and emerging markets.
    • Expected to create meaningful value for shareholders.
  2. When was this transaction first announced and when did it close?

    On October 5, 2014, BD and CareFusion announced a definitive agreement under which BD would acquire CareFusion for $58.00 per share in cash and stock, or a total of $12.2 billion, to create a global leader in medication management and patient safety solutions. The agreement had been unanimously approved by the Boards of both companies.

    The acquisition of CareFusion by BD, through a merger transaction, was consummated on March 17, 2015. Upon completion of the acquisition, CareFusion became a wholly owned subsidiary of BD. For U.S. federal income tax purposes, shareholders of CareFusion were treated as having exchanged their shares in the merger before market opening on the Closing Date.

  3. What will I receive for my CareFusion common stock as a result of the transaction?

    Each share of CareFusion held in book-entry form immediately prior to the transaction has been cancelled and converted into the right to receive: $49.00 in cash, without interest and less any applicable withholding taxes, and 0.0777 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 CareFusion and the CareFusion shareholders’ vote on January 21, 2015. Cash payments, including a statement of ownership, were mailed by Computershare to all registered shareholders on March 24, 2015.

    Beneficial shareholders who hold shares with a bank, brokerage firm or other nominee, should contact those establishments for further information about receiving payment.

  4. I would have liked to convert my shares, but I wasn’t given the choice.

    On January 21, 2015, a special meeting was held for CareFusion stockholders to consider and vote upon the proposed merger of CareFusion and BD. CareFusion stockholders approved the definitive merger agreement and the merger transaction, with approximately 76% of shares outstanding cast in favor of the proposal.

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

    The receipt of the merger consideration by U.S. holders in exchange for shares of CareFusion common stock pursuant to the merger will be 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 CareFusion common stock pursuant to the merger will recognize 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 shares.

    If a U.S. holder’s holding period in the shares of CareFusion common stock surrendered in the merger was greater than one year as of the Closing Date, the gain or loss will be long-term capital gain or loss (provided that the U.S. holder held such shares as capital assets for U.S. federal income tax purposes). Long-term capital gains of certain non-corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of a capital loss recognized on the exchange is subject to limitations. If a U.S. holder acquired different blocks of CareFusion common stock at different times or different prices, such U.S. holder must determine its adjusted tax basis and holding period separately with respect to each block of CareFusion common stock.

    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 CareFusion 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 CareFusion 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 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 tests 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. 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 CareFusion common stock that also actually or constructively own BD common stock should consult their tax advisors regarding the application of the foregoing rules to their particular circumstances, and any actions that may be taken to mitigate the potential application of such rules.

  6. What will be the tax basis of the new BD shares received at the time of closing?

    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 $142.29 on March 16, 2015, the last trading day before the Closing Date, as the fair market value of the BD common stock issued in the merger.

  7. What are the tax implications for non-U.S. CareFusion shareholders?

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

  8. What was the number of CareFusion shares outstanding by which the fair value of BD’s ordinary shares issued to CareFusion shareholders was based on?

    The acquisition date fair value of BD’s ordinary shares issued to CareFusion shareholders was based on approximately 205.3 million of CareFusion’s shares outstanding, multiplied by the exchange ratio of 0.0777, and BD’s closing share price as of March 16, 2015 of $142.49 per share. Refer to the calculation below:

    (in millions, except per share data)
    Total CareFusion shares outstanding 205.3
    Conversion factor 0.0777
    Shares of BD issued (par value $1.00) 15.9
    Value per share of BD common stock as of March 16, 2015 $142.29
    Fair value of BD stock issued in respect of outstanding CareFusion shares $ 2,269

  9. Is an IRS Form 8937 available for the transaction?

    Yes, the link to IRS Form 8937 and attachments, that was filed by BD on April 9, 2015, can be found on the bd.com/investors website.

  10. Does the capital gains tax treatment apply to shares held within an IRA or a qualified retirement plan such as a 401(k) plan?

    No. In general, gains realized on shares of CareFusion common stock held within IRAs and qualified retirement plans are not subject to current U.S. federal income taxation.

  11. 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 suspend the share buyback program in the near term.
    • BD is committed to maintaining a strong investment grade credit rating and its current dividend per share will grow in line with our expectations for long-term earnings growth.