Big pharma, Partnering, Pharma

Cardinal Health agrees to acquire Cordis from J&J

Posted on 03 March 2015

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Big pharma giant Johnson & Johnson has found a buyer for its Cordis unit, a manufacturer of cardiology and endovascular devices, which it put on the market in August 2014 .

Cardinal Health has made “a binding offer” to acquire the business for $1.944 billion.

Cordis had annual sales in 2014 of approximately $780 million, split almost evenly between cardiology and endovascular products. Cardinal, which expressed excitement about the purchase, believes the deal could yield an increase of $.20 per share by 2017 and that “synergies” between the two companies could produce $100 million annually by the end of fiscal 2018 for Cardinal’s bottom line.

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Several analysts have weighed in on the deal. “While this transaction is not without obvious risks and does mark a change in CAH’s overall business mix/business model, we believe the financial attractiveness outweighs this fact,” Evercore ISI analyst Ross Muken said in a research note.

In addition, once the deal closes, Cardinal would be able to compete more effectively with powerful competitors like Abbott Laboratories (ABT), Boston Scientific (BSX) and Medtronic Plc., said Larry Biegelsen, an analyst at Wells Fargo in New York, in a research note, according to Bloomberg.

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