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Rating Action:

Moody's assigns Ba1 rating to Becton Dickinson's proposed euro note offering

20 May 2019

New York, May 20, 2019 -- Moody's Investors Service ("Moody's") today assigned Ba1 ratings to the senior unsecured notes to be offered by Becton Dickinson Euro Finance S.a.r.l. ("BD Euro Finance"), a newly-formed wholly owned financing subsidiary of Becton, Dickinson and Company ("BD"). Net proceeds from the notes and cash on hand will be used to repay existing indebtedness and to cover associated fees and expenses. As part of the refinancing, BD plans to repay at maturity its euro 1 billion notes due in June 2019 and to tender for certain other outstanding notes of BD. All other ratings for the company remain unchanged. The outlook of BD is positive.

Moody's views the note offering and associated tender offer as credit positive for BD. The company will benefit from lower cash interest costs and will extend its debt maturity profile. The transaction will be largely leverage neutral, with the exception of some premiums paid. BD's euro denominated debt serves as a hedge to the company's euro denominated assets and cash flows.

BD Euro Finance's principal activities include debt issuance and intercompany group financing and it has no subsidiaries. It holds no material assets and does not engage in any other business activities. Its obligations under the proposed notes will be fully and unconditionally guaranteed by BD on an unsecured basis. The notes are rated Ba1 reflecting the senior unsecured rating of BD as the guarantor.

Ratings assigned:

Becton Dickinson Euro Finance S.a.r.l.

New EUR senior unsecured notes, Ba1 (LGD 4)

RATINGS RATIONALE

BD's Ba1 Corporate Family Rating reflects its high financial leverage with debt/EBITDA near 4.2 times for the most recent LTM period. The rating also reflects the company's rapid pace of acquisitions, evidenced by the announcement of the $25.2 billion acquisition of C.R. Bard approximately two years after the $12.5 billion acquisition of CareFusion. The ratings reflect the company's meaningful scale in the medical device industry with revenues exceeding $17 billion and global reach, with approximately 43% of sales generated outside the United States. The company is well diversified, with market leading positions across multiple product categories. The company has made significant progress integrating the Bard acquisition and Moody's expects BD to achieve $300 million of cost savings by fiscal 2020.

BD's SGL-1 Speculative Grade Liquidity Rating reflects its very good liquidity profile. The company's liquidity profile benefits from its holdings of approximately $700 million in cash, and Moody's expects free cash flow (after capital expenditures and dividends) will exceed $2 billion in the next year. BD also has full access to a substantially undrawn $2.25 billion revolving credit facility. Moody's expects BD will use free cash flow to redeem maturing debt in the next year as the company executes on its deleveraging plans.

Ratings could be upgraded if the company continues to reduce leverage while maintaining a balanced approach to capital allocation. BD would also need to continue to successfully integrate the Bard acquisition. Quantitatively, ratings could be upgraded if debt/EBITDA approaches 3.5 times.

Ratings could be downgraded if the company encounters problems integrating Bard or if the company pursues meaningful debt-financed acquisitions while leverage remains at elevated levels. Quantitatively, ratings could be downgraded if Moody's expects debt/EBITDA to be sustained above 4.25 times.

Becton, Dickinson and Company, headquartered in Franklin Lakes, New Jersey, is a global medical technology company engaged in the development, manufacture and sale of a broad range of medical supplies, devices, and laboratory equipment used by healthcare institutions, physicians, clinical laboratories, and the general public. Revenues are approximately $17 billion.

The principal methodology used in these ratings was Medical Product and Device Industry published in June 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Scott Tuhy
Senior Vice President
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Jessica Gladstone, CFA
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

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