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Cardinal Health denies rumors it's for sale

|Includes: Cardinal Health Inc. (CAH)

Medical products supplier Cardinal Health Inc. (NYSE:CAH) took the unusual step Tuesday afternoon of publicly responding to rumors of an imminent sale to a private equity firm.

The message? “Cardinal Health is not in discussions with any party regarding an acquisition of Cardinal Health,” according to a statement from the Dublin, Ohio, company.

That’s bad news for stock market speculators, who bid Cardinal’s shares up 6 percent, and as high as $34.23 on Tuesday. The announcement sent shares tumbling, though Cardinal’s price is still up about 1 percent in late afternoon trading.

The rumor seems to stem at least in part from a post on the blog ZeroHedge, which connected a surge in Cardinal’s credit default swaps to the likelihood of a leveraged buyout.

“For an investment grade company … which barely has any debt concerns, this kind of [credit default swap] jump on no credit adverse news means only one thing: the imminent incursion of a massive load of debt, most typically associated with a Leveraged Buy Out,” wrote a ZeroHedge blogger using the nom de plume Tyler Durden.

Alas, Cardinal has thrown cold water on Durden’s prediction (for now). “While it is our longstanding practice not to respond to market rumors and speculation, we are making an exception in this limited situation,” the company said in its terse, three-sentence statement.

Nonetheless, Durden will probably take pride in the fact that his blog post prompted a $98-billion company to break with a “longstanding practice.” And as another blogger pointed out, just because the company isn’t engaged in discussions doesn’t mean a deal can’t come — there’s always the possibility of a hostile takeover, albeit a remote one.

Disclosure: No positions.