Medtronic deals its patient monitoring & recovery biz to Cardinal Health for $6.1 billion
Also in April, Medtronic (NYSE:MDT) said it agreed to deal a portion of its patient monitoring & recovery business to Cardinal Health (NYSE:CAH) for $6.1 billion in cash, confirming months of speculation that the world’s largest medical device maker was looking to slim down.
Rumors that the Fridley, Minn.-based company wanted to divest the supplies business, gained as part of its $50 billion Covidien acquisition, 1st emerged in early February. In March several companies were said to be interested, Dublin, Ohio.-based Cardinal Health among them; earlier in April Cardinal was said to be closing in on a deal. The medical supplies business, which employs more than 10,000 workers, threw off earnings before interest, taxes, depreciation and amortization of approximately $500 million last year.
On April 18, Medtronic said it would divest the patient care, deep vein thrombosis and nutritional insufficiency businesses to Cardinal, which already distributes some of the affected products. The deal, expected to close by the end of Medtronic’s fiscal 2nd quarter in October, is slated to deliver net profits of roughly $5.5 billion, the company said.
“This is a positive transaction for all involved – Medtronic, Cardinal Health, and our respective shareholders and employees – who we believe will all thrive under this change in ownership. In addition, it signifies our commitment to disciplined portfolio management,” chairman & CEO Omar Ishrak said in prepared remarks. “Medtronic has had a specific focus over the past several years on ensuring that we are delivering compelling clinical and economic value to health systems and patients around the world. Ultimately, we came to the conclusion that these products – while truly meaningful to patients in need – are best suited under ownership that can provide the investment and focus that these businesses require. At the same time, we can put these proceeds to work, investing over the long-term in higher returning internal and external opportunities that are more directly aligned with our growth strategies of therapy innovation, globalization, and economic value.”
“We are thrilled about today’s announcement, as this well-established product line is complementary to our medical consumables business and fits naturally into our customer offering. For this reason, this product portfolio has been on our radar for many years,” added Cardinal Health chairman & CEO George Barrett. “We distribute some of these products today and have been collaborative partners with the leadership of this business. Given the current trends in healthcare, including aging demographics and a focus on post-acute care, this industry-leading portfolio will help us further expand our scope in the operating room, in long-term care facilities and in home healthcare, reaching customers across the entire continuum of care.”