Cardinal Health to acquire Medtronic division for $6.1B

DUBLIN, Ohio — Cardinal Health will acquire Medtronic's patient care, deep vein thrombosis and nutritional insufficiency businesses for $6.1 billion in cash. The transaction is expected to close in the first quarter of Cardinal Health's fiscal year 2018, subject to customary closing conditions, including regulatory clearances.  

The purchase price does not include cash tax benefits of at least $100 million. The acquisition is expected to be financed with a combination of $4.5 billion in new senior unsecured notes and existing cash.

The patient care, deep vein thrombosis and nutritional insufficiency businesses encompass 23 product categories across multiple market settings, including Curity, Kendall, Dover, Argyle and Kangaroo, which are used in nearly every U.S. hospital, stated Cardinal Health. Total revenues for the businesses were $2.3 billion for the 12 months ending October 2016 with more than 70% of total sales in the United States.

"We are thrilled about today's announcement, as this well-established product line is complementary to our medical consumables business and fits naturally into our customer offering. For this reason, this product portfolio has been on our radar for many years," said George S. Barrett, Cardinal Health chairman and CEO. "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. We're also looking forward to welcoming the more than 10,000 employees across these businesses who share our dedication to serving customers and their patients by providing high-quality products and services." 

Once the transaction is complete, the Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency businesses will become part of Cardinal Health's Medical segment, which is led by Don Casey, the segment's CEO.

"Not only is this portfolio complementary to our existing suite of products, it enables us to build further scale on our established global platforms," said Casey. "We are familiar with the talented team who will be joining us and have worked closely with many of them in the past. We believe this will help us execute an efficient and seamless integration after the transaction closes. These leading products perfectly complement Cardinal Health's position in a value-based world, bringing additional reach and breadth that build on our existing strengths."  

Cardinal Health plans to issue long-term debt to finance the transaction and has obtained a commitment letter from Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC to provide a $4.5 billion unsecured bridge loan.

Goldman, Sachs & Co. and Perella Weinberg Partners LP served as Cardinal Health's financial advisors on this transaction, and Skadden, Arps, Slate, Meagher & Flom LLP and Jones Day served as its legal advisors.