Shares of Cardinal Health (CAH) - Get Report were rising Friday after the drug distributor said it will sell Cordis, its medical device business, to private-equity firm Hellman & Friedman for about $1 billion.
Shares of the Dublin, Ohio., company rose 1.7% to $56.67.
The transaction is expected to close in the first half of Cardinal Health's fiscal year 2022, subject to regulatory approvals.
"Cordis has a long history of innovation in minimally invasive cardiovascular technology, and we are confident that with H&F as its owner, Cordis will be well-positioned for growth, innovation and success," said Mike Kaufmann, chief executive of Cardinal Health, in a statement.
"Our decision to divest Cordis demonstrates our disciplined approach to evaluating our portfolio and focusing our resources in our strategic growth areas where we are an advantaged owner," Kaufmann added. "Looking forward, we remain committed to our medical distribution and global medical products businesses."
The divestiture of the Cordis business will decrease Cardinal Health's medical segment profit by roughly $60 million to $70 million annually.
After the deal closes, most assets and liabilities associated with the Cordis business will transfer to H&F, Cardinal Health said.
The Cordis deal will result in a pretax loss of up to $120 million in the fiscal third quarter, the company said. Cardinal Health was authorized to incur costs of up to $125 million associated with this sale, primarily in its fiscal years 2021 and 2022.
"Cordis is an excellent fit with our philosophy of investing in great businesses as a market-leading cardiovascular device manufacturer known for high-quality products, strong physician satisfaction and superb patient outcomes," said Hunter Philbrick, a partner at H&F.