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Cardinal Health to spend USD 6bn on Medtronic unit
Posted on Thursday, 20 April 2017 12:53
Cardinal Health, the US healthcare service provider, which bought Cordis in 2015, is now handing over USD 6.10 billion in cash to pick up the patient care, deep vein thrombosis and nutritional insufficiency businesses of Ireland-based Medtronic.
The deal is expected to be financed using USD 4.50 billion in new senior unsecured notes and existing cash with the addition of the assets advancing its geographical scale, expanding existing channel reach into the operating room and creating long-term care.
Cardinal Health believes the acquisition will boost non generally accepted accounting principles diluted earnings per share from continuing operations by USD 0.21 apiece in fiscal 2018, which includes USD 100.00 million of inventory step-up costs during the first few months.
Speculation about the potential tie up began earlier this month when Reuters citied people familiar with the matter as saying Medtronic is exploring a sale of its medical supplies unit to the US-based firm for around USD 6.00 billion.
The report said the company, which moved its headquarters from Minneapolis to Ireland following the USD 42.90 billion acquisition of Covidien in 2015, is working with advisors to the deal, which it hopes would fetch up to ten times earnings before interest, taxes, depreciation and amortisation.
Medtronic’s patient care, deep vein thrombosis and nutritional insufficiency business comprises 23 product categories, including a number of leading brands such as Kendall, Kangaroo and Argyle, which are used in a large portion of US hospitals.
The assets generated revenue of about USD 2.30 billion in the 12 months to 31st October 2016, with more than 70.0 per cent of total sales recorded in the States.
Completion of the acquisition is expected in the first quarter of Cardinal Health’s FY 2018, subject to regulatory approvals.
George Barrett, chief executive of the buyer, said: “We distribute some of these products today and have been collaborative partners with the leadership of this business.
“Given the current trends in healthcare, including aging demographics and a focus on post-acute care, this industry-leading portfolio will help us further expand our scope in the operating room, in long-term care facilities and in home healthcare, reaching customers across the entire continuum of care.”
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