By Chelsey Dulaney
Cardinal Health Inc. agreed to acquire the heart-product
business Cordis from Johnson & Johnson for $1.94 billion in
cash, strengthening Cardinal's medical device business.
When including tax benefits, Cardinal's purchase price for
Cordis drops to $1.59 billion.
Cordis makes medical devices such as stents and catheters and
focuses on less-invasive treatments for vascular disease. The
business had $780 million in sales in 2014, with about 70% coming
from outside the U.S.
The deal comes as Cardinal, a drug wholesaler that also makes
gloves and surgical apparel, looks to add medical products to its
portfolio. Cardinal acts as a middleman between pharmaceutical
companies and hospitals, pharmacies and other health care
providers.
Cardinal has added orthopedic and wound management products in
recent years and last year bought vascular device-maker
AccessClosure for $320 million.
J&J, meanwhile, is working to pare its wide-ranging
portfolio to focus on higher-growth businesses and reduce costs.
J&J, a pioneer in stents that prop open clogged heart arteries,
said years ago that it would get out of that business.
The Wall Street Journal reported in late August that J&J was
seeking a buyer for Cordis and that the business could fetch $1.5
to $2 billion in a sale.
"This is a significant step forward in our cardiovascular
strategy," said Cardinal Health Chief Executive George Barrett in a
news release. "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."
Cardinal expects the deal to add more than 20 cents to its
adjusted per-share earnings from continuing operations in its 2017
fiscal year and more thereafter.
The deal, subject to regulatory approval, is expected to close
near the end of the year.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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