The New Brunswick, N.J.-based healthcare giant said it expects the deal to close “towards the end of 2015.”
The $1.94 billion deal, which is worth some $1.59 billion net of tax benefits, offers annual synergies in excess of $100 million by the end of fiscal 2018, Cardinal Health said in announcing the deal last March.
Reports surfaced in August putting the price tag at $1.5 billion to $2 billion; in late April Cardinal emerged as the leading suitor. That company said it will finance the buyout of Fremont, Calif.-based Cordis with a combination of $1.0 billion in new senior debt and cash. Cordis posts annual sales of roughly $780 million “split almost evenly between cardiology and endovascular products,” with about 70% coming from outside the U.S., Cardinal Health said.
CEO George Barrett said the company may make more acquisitions in cardiology and endovascular treatment as well as in the trauma and wound care segment.
“Those are areas where we could see opportunities to fill out the portfolio,” Barrett said in an interview.
“We are extremely excited about the acquisition of Cordis. This is a significant step forward in our cardiovascular strategy. 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,” Barrett added in prepared remarks. “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.”
Cordis was a pioneer in stents but has for years been losing share to rival device makers. In 2011 the company shut down its drug-eluting stent program, citing “evolving market dynamics” that made other cardiovascular device areas more promising targets for its efforts. The sale would also fit in line with J&J’s larger efforts to streamline its business and reduce costs. The healthcare giant also sold its Ortho-Clinical Diagnostics unit for $4 billion in 2014.
“This initiative is part of our ongoing disciplined portfolio management approach to focus on our most promising opportunities to help patients and drive growth,” J&J global surgery group chairman Gary Pruden said in prepared remarks. “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.”
Cardinal Health said it expects the deal for Cordis, which will be led by Cardinal Health medical segment CEO Don Casey, to add 20¢ to its adjusted earnings per share in fiscal 2017 and “increasingly accretive” after that.
“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,” Casey said in a statement.
Material from Reuters was used in this report.