Cardinal Health to sell its Cordis business for approximately $1 billion
Cardinal Health has signed a definitive agreement to sell its Cordis business to Hellman & Friedman (H&F) for approximately $1 billion, which includes the buyer’s assumption of certain liabilities and seller’s retention of certain working capital accounts. The transaction is expected to close in the first half of Cardinal Health’s fiscal year 2022, subject to customary closing conditions and regulatory clearances.
“Cordis has a long history of innovation in minimally-invasive cardiovascular technology, and we are confident that with H&F as its owner, Cordis will be well-positioned for growth, innovation and success,” said Mike Kaufmann, CEO, Cardinal Health. “Cardinal Health and H&F have a shared passion for delivering high-quality medical products to customers and we are excited about the future for the Cordis business under H&F’s ownership.”
“Our decision to divest Cordis demonstrates our disciplined approach to evaluating our portfolio and focusing our resources in our strategic growth areas where we are an advantaged owner,” Kaufmann continued. “Looking forward, we remain committed to our medical distribution and global medical products businesses.”
“Cordis is an excellent fit with our philosophy of investing in great businesses as a market-leading cardiovascular device manufacturer known for high-quality products, strong physician satisfaction and superb patient outcomes,” said Hunter Philbrick, Partner at H&F. “We are excited to invest in the talented Cordis, Ajax and Zeus teams to drive industry leadership, therapeutic innovation and improved patient experiences.”
“We at Ajax Health and Zeus Health are ecstatic about injecting growth into Cordis’ powerful platform, and will do so through investments in the core business and an independent R&D engine – the ‘Cordis Accelerator’ – to develop and commercialise a new pipeline of products exclusively for Cordis,” said Duke Rohlen, CEO, Ajax Health and Zeus Health, partners to H&F in the transaction, and Executive Chairman-designate of Cordis and CEO of Cordis Accelerator. “We see an unparalleled opportunity to partner with both existing Cordis leadership and H&F to combine a best-in-class innovation engine with a strong and robust commercial chassis. Together, we will establish Cordis as the standard-bearer for medical device innovation.”
After closing, most assets and liabilities associated with the Cordis business will transfer to H&F. Cardinal Health will retain full authority for lawsuits related to inferior vena cava filters in the US and Canada, as well as the liability associated with these matters. Cardinal Health estimates that, after completion of the transition services agreement, the divestiture of the Cordis business will decrease Medical segment profit by approximately $60 million to $70 million on an annual run-rate basis.
In connection with the entry into this definitive agreement, Cardinal Health will classify the Cordis business as held for sale, which Cardinal Health expects to result in a pre-tax loss of up to $120 million in the third quarter of its fiscal year 2021. Additionally, Cardinal Health was authorised to incur costs associated with the planned divestiture of up to $125 million, primarily in its fiscal years 2021 and 2022.