por John R. Fischer
, Senior Reporter | March 17, 2021
Cardinal Health is selling its Cordis business, a maker of cardiovascular technology, to global private equity firm Hellman & Friedman for approximately $1 billion.
Cordis designs a number of minimally invasive cardiovascular products, including stents, catheters, sheaths, closure devices and balloons. It expanded its portfolio in 2019
to offer solutions designed to facilitate the transradial approach (TRA) for interventional cardiology procedures.
"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. Looking forward, we remain committed to our medical distribution and global medical products businesses,” said Mike Kaufmann, CEO of Cardinal Health, in a statement.
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The company estimates the divestiture of the Cordis business will decrease Cardinal Health’s medical segment profit by approximately $60 million to $70 million on an annual run-rate basis, upon completion of the sale. Most assets and liabilities associated with the Cordis business will transfer to H&F, with Cardinal Health retaining full authority for lawsuits and liability related to inferior vena cava filters in the U.S. and Canada.
Cardinal Health’s entry into a definitive agreement requires that it classify the Cordis business as held for sale, resulting in an expected pre-tax loss of up to $120 million in the third quarter of its fiscal year 2021. In addition, Cardinal Health was authorized to incur costs associated with the planned divestiture of up to $125 million, primarily for its fiscal years 2021 and 2022.
"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 through an independent R&D engine — the 'Cordis Accelerator' — to develop and commercialize a new pipeline of products exclusively for Cordis," said Duke Rohlen, CEO of Ajax Health and Zeus Health, partners to H&F in the transaction, and executive chairman-designate of Cordis. He will also serve as CEO of Cordis Accelerator.
The sale is expected to be completed in the first half of Cardinal Health’s fiscal year 2022 and includes buyer’s assumption of certain liabilities and seller’s retention of certain working capital accounts.
The sale is subject to customary closing conditions and regulatory clearances.
Cardinal Health declined to comment.