It took a few months to get to the alter, but Johnson & Johnson finally sait "I do" to Dublin, Ohio-based Cardinal Health Inc.'s $1.94 billion offer to purchase JNJ's Cordis division. The offer initially was made at the beginning of March.
Cordis makes cardiovascular devices such as stents and catheters. The companies expect the deal to close toward the end of 2015. The Cordis business will report to Don Casey, CEO of Cardinal Health's medical segment, once the acquisition is complete.
Cordis business, based in Fremont, Calif., had 2014 revenue of about $780 million. The United States is its largest market, but 70 percent of total sales come from outside the U.S.
Cardinal’s Chairman and CEO George Barrett said the company is focused on medical products that have become commoditized, as the potential for differentiation has become limited. Cardinal has focused its efforts on areas including wound management, cardiovascular and orthopedics.
“We are extremely excited about the acquisition of Cordis. This is a significant step forward in our cardiovascular strategy,” Barrett said. “Cordis brings with it a long and proud legacy of cardiovascular innovation. This move highlights our commitment to address a major pain point in healthcare systems through innovative new approaches to the management of physician-preference items. This acquisition follows a sequence of strategic moves for Cardinal Health in the areas of cardiology, wound management and orthopedics. We are well-positioned to help customers standardize around mature medical devices, while bringing them innovative solutions around supply chain management, inventory optimization, and work flow tools and data to support the most effective management of the patient,”
Barrett said that an aging global population and demand for less-invasive medical treatments, makes the combination of Cordis and Cardinal a sound move.
“The acquisition of Cordis reinforces our strategic position to address this need and strengthens an important growth driver in the Cardinal Health portfolio,” Barrett said.
The divestiture is part of New Brunswick, N.J.-based JNJ’s strategy to shed its underperforming assets, reduce costs and focus on higher-growth businesses.
A decade ago, Cordis was a market-leading golden child for JNJ as one of the pioneers in the drug-coated stent market. JNJ acquired Cordis in 1996 for $1.8 billion. However, rapid and fierce competition, along with research that raised questions about drug-coated stents’ true efficacy compared to traditional stents led to shrinking sales and market share for Cordis. In 2011, the company got out of the drug-coated stent business.