Cardinal Health said it will acquire Johnson & Johnson’s heart-device business Cordis for $1.9 billion in cash, a move it hopes will bolster its position in the cardiovascular market.
For at least three years, Johnson & Johnson has been looking to get out of the slower-growth medical device business to focus on other medical technologies promising higher growth, according to a report published last year by the Wall Street Journal. J&J pioneered the stents that open clogged heart arteries, creating an estimated $5 billion global market, the WSJ said.
Cordis, a manufacturer of cardiology and endovascular devices, focuses on less-invasive treatments for vascular disease, a key component of the acquisition, according to Cardinal Health CEO and Chairman George Barrett.
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"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,” Barrett said in a statement.
The acquisition is strategic to Cardinal Health’s focus on cardiology, wound management and orthopedics, and is an important growth driver in the Cardinal Health portfolio, Barrett said.
Cordis had $780 million in sales in 2014, with about 70 percent coming from outside the U.S.
Cardinal Health has obtained a commitment letter from Goldman Sachs Bank USA for a new $1 billion unsecured bridge loan in connection with the planned acquisition, according to the company. It plans to issue long-term debt prior to the transaction closing later this calendar year and terminate the bridge loan.
When including tax benefits, Cardinal’s purchase price for Cordis drops to $1.6 billion.
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.
Headquartered in Dublin, Ohio, Cardinal Health, Inc. is a $91 billion supply chain healthcare services company. It provides pharmaceuticals, medical products and services and is also a direct-to-home medical supplies distributor, according to the company.
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