Cardinal Health to Acquire Alaris
Cardinal Health Inc., the nation’s second-biggest drug wholesaler, said Wednesday that it agreed to buy Alaris Medical Systems Inc. of San Diego for about $1.6 billion.
Under terms of the deal, expected to close by June, Cardinal would make a cash offer of $22.35 a share for all of Alaris’ common stock outstanding, an 18% premium over Alaris’ closing price of $18.88 on Tuesday. Cardinal also would assume $338 million in debt.
Alaris, with about 3,000 employees in the United States and 12 other countries, is a leading manufacturer of infusion pumps, valves and tubing used for the bedside intravenous delivery of medications and nutritional supplements to patients.
Cardinal executives said Alaris would give the company a good revenue stream and an entryway to international markets.
“We have known them a long time; they are all around us in the hospital marketplace,” Robert D. Walter, chairman and chief executive of Dublin, Ohio-based Cardinal Health, said in a conference call.
David L. Schlotterbeck, Alaris’ president and chief executive, said the deal made sense because his company lacked the resources to take advantage of new technologies.
A Cardinal spokesman said it did not expect any job cuts in the near term because the companies had complementary businesses.
Andrew L. Speller, an analyst for A.G. Edwards & Sons, said the acquisition would help lessen Cardinal’s earnings dependence on pharmaceutical distribution.
But others questioned the cost and the timing. Cardinal is facing a probe by the Securities and Exchange Commission into its acquisition-related accounting.
Moody’s Investors Service placed Cardinal’s rating under review for a possible downgrade because of higher debt and “evidence that Cardinal continues to seek acquisitions to satisfy shareholder value.”
Alaris’ net income in the first quarter increased to $11.6 million, or 15 cents a share, from $2.5 million, or 4 cents, a year earlier. Revenue reached $134.2 million, up 11% from the same quarter last year.
Alaris shares rose $3.37 on Wednesday to $22.25, and Cardinal shares fell 32 cents to $67.20. Both trade on the New York Stock Exchange.
Times wire services were used in compiling this report.
