By Chelsey Dulaney
Cardinal Health Inc. on Friday said it had agreed to buy Harvard
Drug Group for about $1.12 billion in a move aimed at boosting the
drug wholesaler's core generics business.
Dublin, Ohio-based Cardinal said the deal would broaden the
generic and over-the-counter medications it offers and expand its
telesales program.
The company added that the acquisition would bring specialized
packaging offerings to its portfolio of products, such as gloves
and surgical apparel, that it offers to hospital systems and
institutions.
Cardinal also has announced that it is buying Johnson &
Johnson's heart-product business, which includes products like
stents and catheters, for about $1.94 billion in cash. That deal,
seen expanding the company's portfolio of medical products, is
expected to close near the end of the year.
In its latest quarter, which ended in March, Cardinal's medical
products made up about 11% of its overall revenue, while
pharmaceutical sales accounted for the remainder.
Harvard Drug Group, owned by investment firm Court Square
Capital Partners, posted revenue of about $450 million in 2014.
Cardinal expects the deal to add more than 15 cents to its core
earnings in its 2016 fiscal year and be increasingly accretive
thereafter.
Last July, The Wall Street Journal reported that Court Square
Capital had put Harvard Drug on the auction block in a sale that
could reap at least $1 billion.
Harvard Drug--which has distribution facilities in Livonia,
Decatur, Ala., and Indianapolis--serves thousands of customers,
including hospitals, nursing facilities, chain and independent
pharmacies, buying groups, medical clinics, veterinarians and
wholesale distributors.
Harvard Drug traces its origin to Great Lakes Whole Drug,
founded in 1967. The company took its current name in 1997 after
merging several entities it acquired over the years.
New York-based Court Square acquired Harvard Drug in 2010 from
Miami firm H.I.G. Capital, which recapitalized the company in
2006.
Cardinal plans to use cash and new debt to pay for the
acquisition.
For the new fiscal year, Cardinal forecast per-share earnings
from continuing operations of $4.75 to $5.05. Analysts polled by
Thomson Reuters recently forecast $4.89 a share in earnings.
Shares of Cardinal Health, up 24% over the past year, added 22
cents to $87.83.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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