Cardinal Health has entered a definitive agreement to purchase VIASYS Healthcare, a medical device company, for approximately $1.5 billion (including assumption of debt), in a $42.75 cash tender offer, representing a 35% premium to its Friday close of $31.55. Cardinal called the acquisition an "excellent strategic fit" with its Clinical and Medical Products segment. An ongoing $3.1b share repurchase plan will not be changed, although there is a possibility of an additional $1b allotment pending board approval. Cardinal said the acquisition will not impact current year earnings, in which it expects EPS of $3.32 - $3.40, but there will be a $0.10 dilutive impact next year, which will be offset by repurchased shares, thus it is maintaining EPS guidance of $3.95 - $4.15. VIASYS had 2006 revenues of $610m and net income of $28.9m. The transaction is subject to standard approvals and is expected to close this summer. VIASYS last traded at $42.30 in pre-market activity, while Cardinal Health was down a few cents on thin volume from its Friday close of $69.07.
Sources: Press release
Commentary: OSI Systems and Viasys Healthcare Selected As Top Stocks • New Buy Ideas: 15 Stocks I Expect To Breakout • Cardinal Health to Sell Drugmaking Unit for a Surprising $3.3B
Stocks/ETFs to watch: Cardinal Health Inc. (NYSE:CAH), Viasys Healthcare (VAS). Competitors: McKesson Corp. (NYSE:MCK), AmerisourceBergen Corp. (NYSE:ABC), Respironics Inc. (RESP). ETFs: Health Care Select Sector SPDR (NYSEARCA:XLV)
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