- Significantly advances Cardinal Health's offering of
interventional cardiology and endovascular solutions for integrated
health systems and their patients
- Creates immediate global scale and scope
- Fiscal 2017, first full post-close year, accretion is
expected to be greater than $0.20 in
non-GAAP diluted earnings per share from continuing operations;
increasingly accretive thereafter
DUBLIN, Ohio, March 2, 2015 /PRNewswire/ -- Cardinal Health
today announced plans to acquire Johnson & Johnson's Cordis
business, a leading global manufacturer of cardiology and
endovascular devices, for $1.944
billion in cash, or approximately $1.594 billion, net of the present value of tax
benefits. The acquisition is expected to be financed with a
combination of $1.0 billion in new
senior unsecured notes and the remainder with existing cash. The
transaction is expected to close in the
United States and key non-U.S. countries towards the end of
calendar 2015.
Assuming this timing, Cardinal Health expects fiscal 2017
accretion in non-GAAP diluted earnings per share (EPS1)
from continuing operations of greater than $0.20 per share, which includes the cost of an
incremental $0.07-$0.08 per share of
interest expense associated with financing the transaction.
The company expects the acquisition to be increasingly accretive
thereafter and assumes that synergies will exceed $100 million annually by the end of fiscal
2018.
Headquartered in Fremont,
Calif., Cordis had annual sales in 2014 of approximately
$780 million, split almost evenly
between cardiology and endovascular products. Cordis is a
global company with a growing portfolio of products and talented
people serving healthcare systems throughout the world. While the
U.S. is the largest single market, 70 percent of total sales come
from outside the U.S. Cordis' international presence includes
operations in more than 50 countries, including China, Japan,
Germany, Italy, France, the United
Kingdom, and Brazil.
"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.
"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," Barrett continued.
Once the transaction is complete, the business will report to
Don Casey, Cardinal Health's Medical
Segment chief executive officer and a medical device industry
veteran.
Casey noted that Cardinal Health and Cordis have complementary
skills and expertise, creating a combined talent base that will be
world class in cardiovascular solutions. "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 Casey.
Proposed Acquisition Details
Cardinal Health has made
a binding offer to acquire Johnson & Johnson's Cordis business
for $1.944 billion in cash. The
information and consultation process with the employees'
representative bodies in applicable jurisdictions, including
France and Germany, is under way. Upon
completion of that process, Cardinal Health expects to enter into a
definitive purchase and sale agreement in respect of the proposed
acquisition. The proposed transaction will also be subject to
customary closing conditions, including regulatory approvals, and
is expected to close in the approximately 20 principal countries
towards the end of calendar year 2015 and in the remaining
countries on a rolling basis afterward.
Cardinal Health has obtained a commitment letter from Goldman
Sachs Bank USA for a new
$1.0 billion unsecured bridge loan in
connection with the planned acquisition. The company plans to issue
long-term debt prior to the transaction closing later this calendar
year and terminate the bridge loan.
Wachtell, Lipton, Rosen and Katz and
Jones Day served as legal advisors, and Goldman, Sachs &
Co. served as Cardinal Health's financial advisor on this
transaction.
For more information on the Cordis acquisition, visit the
Investors page at ir.cardinalhealth.com.
Cardinal Health_Cordis Fact Sheet -
http://origin-qps.onstreammedia.com/origin/multivu_archive/ENR/178649-Cardinal-Health-Fact-Sheet.pdf
CONFERENCE CALL
Cardinal Health will host a webcast and conference call today at
8:30 a.m. Eastern to discuss plans to
acquire Cordis. To access the call and corresponding slide
presentation, go to the Investors page at ir.cardinalhealth.com.
The call also can be accessed by dialing 913-312-0400, conference
ID#9328139. There is no pre-registration for the call; however,
participants are advised to dial into the call at least 10 minutes
prior to the start time.
Presentation slides and an audio replay will be archived on the
website after the conclusion of the meeting. The audio replay will
be available until Monday, March 9,
12 p.m. Eastern by dialing
719-457-0820, and using the conference call ID#9328139.
NON-GAAP FINANCIAL MEASURES (INCLUDING
FOOTNOTE)
Footnote (1) Non-GAAP diluted earnings per share
from continuing operations: (A) earnings from continuing
operations, excluding (1) restructuring and employee
severance, (2) amortization and acquisition-related costs, (3)
impairments and (gain)/loss on disposal of assets, (4) litigation
(recoveries)/charges, net, (5) LIFO charges/(credits), and (6) loss
on extinguishment of debt, each net of tax, (B) divided by diluted
weighted average shares outstanding.
Cardinal Health presents non-GAAP diluted earnings per share
from continuing operations on a forward-looking basis. The most
directly comparable forward-looking GAAP measure is diluted
earnings per share from continuing operations. Cardinal Health is
unable to provide a quantitative reconciliation of this
forward-looking non-GAAP measure to the most directly comparable
forward-looking GAAP measure, because Cardinal Health cannot
reliably forecast restructuring and employee severance,
amortization and acquisition-related costs (which Cardinal Health
expects to increase significantly as a result of the Cordis
acquisition), impairments and (gain)/loss on disposal of assets,
litigation (recoveries)/charges, net, and LIFO charges/(credits),
which are difficult to predict and estimate. Please note that the
unavailable reconciling items could significantly impact Cardinal
Health's future financial results.
About Cardinal Health
Headquartered in Dublin, Ohio,
Cardinal Health, Inc. (NYSE: CAH) is a $91
billion health care services company that improves the
cost-effectiveness of health care. As the business behind health
care, Cardinal Health helps pharmacies, hospitals, ambulatory
surgery centers, clinical laboratories and physician offices focus
on patient care while reducing costs, enhancing efficiency and
improving quality. Cardinal Health is an essential link in the
health care supply chain, providing pharmaceuticals and medical
products and services to more than 100,000 locations each day and
is also the industry-leading direct-to-home medical supplies
distributor. The company is a leading manufacturer of medical and
surgical products, including gloves, surgical apparel and fluid
management products. In addition, the company operates the nation's
largest network of radiopharmacies that dispense products to aid in
the early diagnosis and treatment of disease. Ranked #22 on the
Fortune 500, Cardinal Health employs 34,000 people worldwide. More
information about the company may be found at
www.cardinalhealth.com and @CardinalHealth on Twitter.
Cautions Concerning Forward-Looking Statements
This
release contains forward-looking statements addressing Cardinal
Health's plans to acquire Cordis and other statements about future
expectations, prospects, estimates and other matters that are
dependent upon future events or developments. These statements may
be identified by words such as "expect," "anticipate," "intend,"
"plan," "believe," "will," "should," "could," "would," "project,"
"continue," "likely," and similar expressions, and include
statements reflecting future results or guidance, statements of
outlook and expense accruals. These matters are subject to risks
and uncertainties that could cause actual results to differ
materially from those projected, anticipated or implied. These
risks and uncertainties include: the ability to successfully
complete the acquisition of Cordis on a timely basis, including
receipt of required regulatory approvals and satisfaction of other
conditions; the ability to retain customers and employees of the
acquired business and to successfully integrate the acquired
business into Cardinal Health's operations, if the acquisition is
completed; the ability to achieve the expected synergies as well as
accretion in earnings, if the acquisition is completed; the
occurrence of any event, change or other circumstance that could
give rise to the termination of the binding offer or the purchase
agreement (once executed); the conditions of the credit markets and
an ability to issue debt on acceptable terms; or the outcome of any
legal proceedings that may be instituted against the parties and
others related to the planned acquisition. Cardinal Health is
subject to additional risks and uncertainties described in Cardinal
Health's Form 10-K, Form 10-Q and Form 8-K reports and exhibits to
those reports. This release reflects management's views as of
March 2, 2015. Except to the
extent required by applicable law, Cardinal Health undertakes no
obligation to update or revise any forward-looking statement.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cardinal-health-to-acquire-cordis-a-worldwide-leader-in-cardiac-and-endovascular-medical-products-for-1944-billion-in-cash-300043429.html
SOURCE Cardinal Health