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Cardinal Health enacts binding offer to buy J&J's Cordis
03-03-2015
by Kelsey Kaustinen  |  Email the author
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DUBLIN, Ohio—Healthcare services company Cardinal Health has announced that it will acquire Johnson & Johnson's Cordis business, a manufacturer of cardiology and endovascular devices, for $1.944 billion in cash, or roughly $1.594 billion net of the present value of tax benefits. Cordis saw annual sales last year of approximately $780 million.
 
The company has made a binding offer to acquire Cordis, and the acceptance period for Cardinal Health's offer ends May 30, 2015, unless extended. Consultations with work councils and trade unions are planned to take place during that time. Once the information and consultation process is complete, Cardinal Health will enter into a definitive purchase and sale agreement in respect of the proposed acquisition. The proposed deal will be subject to customary closing conditions, including regulatory approvals. The company expects this transaction to close in the United States and key non-U.S. Countries near the end of this calendar year. Johnson & Johnson will further discuss this deal during its quarterly earnings call on April 14.
 
"We are extremely excited about the acquisition of Cordis. This is a significant step forward in our cardiovascular strategy,” George Barrett, chairman and CEO of Cardinal Health, said in a press release. “Cordis brings with it a long and proud legacy of cardiovascular innovation. This move highlights our commitment to address a major pain point in healthcare systems through innovative new approaches to the management of physician preference items. This acquisition follows a sequence of strategic moves for Cardinal Health in the areas of cardiology, wound management and orthopedics. We are well positioned to help customers standardize around mature medical devices, while bringing them innovative solutions around supply chain management, inventory optimization, and work flow tools and data to support the most effective management of the patient.”
 
"With an aging population and the accompanying demand for less-invasive medical treatments, health systems around the world are searching for the best way to bring quality care to their patients in the most cost-effective way. The acquisition of Cordis reinforces our strategic position to address this need and strengthens an important growth driver in the Cardinal Health portfolio," he added.
 
Cardinal Health expects fiscal 2017 accretion in non-GAAP diluted earnings per share from continuing operations of greater than 20 cents per share from this transaction, a figure that includes the cost of an incremental 7 cents to 8 cents per share of interest expense associated with financing this acquisition. The deal is expected to be increasingly accretive after 2017, with the expectation that synergies will exceed $100 million annually by the end of fiscal 2018.
 
"We look forward to drawing heavily on the knowledge and innovative spirit of Cordis team members around the world. Additionally, Cordis' global expertise and footprint provide an exciting opportunity to leverage scale in sourcing and manufacturing," said Don Casey, CEO of Cardinal Health's Medical Segment.
 
“This initiative is part of our ongoing disciplined portfolio management approach to focus on our most promising opportunities to help patients and drive growth,” commented Gary Pruden, worldwide chairman, Global Surgery Group, Johnson & Johnson. “Cordis has made significant contributions to the field of cardiovascular care, and we believe the business has a promising future with Cardinal Health, a company with which we have a long-standing relationship. We are grateful for the many contributions that Cordis employees have made over the years.”
 
Code: E03031501

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