Viasys Healthcare Inc., a Conshohocken medical technology company, is being acquired by Cardinal Health Inc., the second-largest U.S. drug distributor, for $1.42 billion.
After the deal, which has been approved by both companies' boards, is completed this summer, Cardinal Health said yesterday that Viasys would become a wholly owned subsidiary.
Cardinal Health, an $80 billion company in Dublin, Ohio, said the acquisition would expand its clinical and medical product offerings worldwide and establish Cardinal as a leader in the $4 billion respiratory-care market.
Cardinal Health's offer of $42.75 a share for Viasys is a 35 percent premium to Viasys' Friday closing share price of $31.55. Viasys shares soared 36.9 percent to close up $11.63 to $43.18, an all-time high. Cardinal Health shares rose 12 cents to $69.19.
"Viasys is a great strategic fit," Cardinal Health chief executive officer R. Kerry Clark said, on a conference call with analysts. "Viasys has great brands and products, along with an exciting technology pipeline that really complements our lineup."
Viasys, with about 40 employees at its headquarters in Conshohocken and 2,400 worldwide, had previously announced plans to move in September into leased offices in a new 41,000-square-foot building on East Elm Street in Conshohocken.
But as a result of yesterday's announcement, both companies said decisions on details, such as whether Viasys will remain in Conshohocken, have not yet been made. As part of the transaction, Cardinal Health will assume $56.1 million in debt that Viasys reported as of March 31.
"We've had initial discussions, but it all has to be worked out," said Viasys chief financial officer Martin Galvan.
Randy Thurman, Viasys' chairman, president and CEO, would remain and report to Cardinal's head of clinical and medical products.
Cardinal Health spokesman Jim Mazzola said that "it's just too early" to be specific about details of the acquisition. "Reductions and facility rationalization will have to take place, but we do see Viasys operations as complementary and building on Cardinal Health's strengths," he said. "This is an impressive management team and a group that we hope to retain within Cardinal Health."
Viasys was on a list of companies Cardinal Health had been interested in buying for a long time, Clark said.
Talks began about a month ago, and stepped up in the last two weeks after Cardinal learned that another, unnamed company was expected to make an offer to buy Viasys.
"We had to act fairly quickly in a situation where there was another company involved," Clark said.
Cardinal Health competes with AmerisourceBergen Corp. in Valley Forge, the nation's third-largest drug wholesaler, and with No. 1 ranked McKesson Corp. The three distribute the majority of prescription pharmaceuticals to U.S. pharmacies, hospitals and nursing homes.
Viasys had 2006 revenue of $610 million. The company focuses on four medical-technology areas: respiratory, neurology, medical disposable and orthopedic products.
Viasys has more than 7,000 hospital customers in 100 countries and generates 40 percent of its revenue from customers outside the United States, adding substantially to Cardinal's international presence, the company said.
While the acquisition will reduce fiscal year 2008 profit by up to 10 cents a share, Cardinal reaffirmed the profit guidance it previously announced of $3.95 to $4.15 a share, including proceeds from the previously announced sale of its pharmaceutical technologies and services business. Cardinal also said it would maintain its share-repurchase plans.
"We think this is a really unique opportunity," Clark told analysts. "We now have a broader product portfolio. We are strengthening our international business. We have a strong plan to realize very significant synergies." Cardinal said it expected to have savings of $85 million to $100 million a year by fiscal year 2010.
Origin: Spun off from Thermo Electron Corp., of Waltham, Mass., in 2001.
Business: Maker of medical equipment in four areas: respiratory, neurology, medical disposables and orthopedics. Headquarters: Conshohocken.
Manufacturing sites: Yorba Linda and Palm Springs, Calif.; Hoechberg, Germany; Madison, Wis.; Old Woking, England; Boston; Wheeling, Ill.
Products: Sleep-diagnostic and lung-function testing machines; patient-monitoring equipment used in surgery; machines to diagnose neurological conditions such as epilepsy and Parkinson's disease; ventilators for people with respiratory ailments. About 15 product lines sold in 140 countries.
Acquisitions: 13 companies for prices of $5 million to $95 million each.
Stock: Initial public offering in November 2001. Price has ranged from $12 to a high of $43.18 yesterday.
Revenue: Doubled from $300 million in 2001 to $610.4 million in 2006.
Net income: $28.9 million last year compared with a loss of $10 million in 2005 due to special charges related to five acquisitions.
Chief executive: Randy Thurman, former president of Rhone-Poulenc Rorer Inc.'s U.S. operations, Collegeville, and Corning Life Sciences, New York.
Employees: 2,400 worldwide, including 40 in Conshohocken.
SOURCE: Viasys Healthcare