Cardinal Health to Buy Johnson & Johnson’s Cordis for Nearly $2 Billion

Cardinal Health

Johnson & Johnson announced that it is selling its Cordis business, which makes vascular technology, to Cardinal Health for approximately $1.94 billion.

Cardinal will acquire Cordis for an aggregate value of $1.99 billion, consisting of $1.944 billion of cash proceeds plus approximately $46 million of retained net receivables. Cordis is a leading global manufacturer of cardiology and endovascular devices, which brought in net revenues of $780 million last year. The business operates in more than 50 countries, with an extensive research and development network and a global commercial footprint.

“This initiative is part of our ongoing disciplined portfolio management approach to focus on our most promising opportunities to help patients and drive growth,” said 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.”

The deal comes as Cardinal looks to add medical products to its portfolio. According to Cardinal, the deal, which is expected to close by the end of 2015, will be slightly dilutive to earnings in the fiscal year ending June 2016, but it expects to boost earnings by 20 cents per share in the fiscal year ending June 30, 2017, and sees cost savings of $100 million by the end of fiscal 2018.

“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. 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,” said George Barrett, chairman and CEO.

Once the transaction is complete, Don Casey, Cardinal Health’s Medical Segment chief executive officer and a medical device industry veteran, will head the business.

Sources: Johnson & Johnson; Cardinal Health

Last updated: 3/2/15; 3:00pm EST

 

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