Cardinal Wings It in Alaris Deal

Walter, more simply, declared Alaris a "terrific fit" with Cardinal.

Cardinal plans to finance the transaction, which totals $2 billion including the assumption of debt, with short-term and medium-term debt and up to $1 billion in cash. The company -- which expects cash flow to surge because of working capital reductions in the industry -- reminded investors on Wednesday that it expects to generate $5 billion in cash annually over the next three years.

Banc of America Securities, which recommends buying Cardinal's stock, actually raised its price target on the stock to $80 this month because of the company's "impressive" cash flow.

Walter followed up on Wednesday by assuring investors: "We can handle this transaction."

Looking ahead, Cardinal expects to realize immediate synergies from the transaction. The company said on Wednesday that the merger will be modestly accretive next year and "meaningfully" accretive by 2007, when the company expects to begin collecting up to $100 million annually from the deal.

Even Ransom feels the acquisition's price could prove fair if Cardinal does, in fact, capture the synergy it expects. But he still questions the mindset that has triggered such expensive acquisitions in the first place.

"They are very EPS-focused. They are very perception-focused," said Ransom, who nevertheless still has a buy recommendation on the stock. "This is a classic 1990s company."