By Chelsey Dulaney
Cardinal Health Inc. has agreed to buy the heart-product
business of Johnson & Johnson for $1.94 billion in cash, in a
move that will add stents and catheters to the list of products
Cardinal offers to hospitals, physicians and ambulatory
centers.
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, works to expand its portfolio of
medical products as hospitals merge and consolidate.
"As we bring more of these strategies to bear, that's going to
make us increasingly important to hospitals," said Don Casey, the
head of Cardinal's medical segment.
Cardinal Chief Executive George Barrett said the company is
focused on medical products that have become commoditized--such as
catheters and guidewires--as the potential for differentiation has
become limited. Cardinal has focused its efforts on areas including
wound management, cardiovascular and orthopedics in recent
years.
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.
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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