agreed Wednesday to buy
, a maker of intravenous medicine safety gear, for $1.6 billion in cash.
Dublin, Ohio-based Cardinal said the transaction, which is valued at $2 billion including the assumption of debt, will extend its portfolio to health care providers and increase its presence outside the U.S.
Cardinal will make a two-stage tender offer to acquire Alaris, of San Diego, for $22.35 a share. Cardinal expects the deal to be modestly accretive in its fiscal year 2005 and meaningfully accretive by fiscal year 2007. The company expects to boost pretax profits by $80 million to $100 million by the end of 2007.
Alaris develops and markets systems for the safe delivery of intravenous medications, and holds long-term contracts to provide necessary, disposable products for use in those systems. Nearly two-thirds of Alaris' revenue is generated by the sale of proprietary disposable supplies. It also provides a broad suite of professional, technical and training services to more than 5,000 hospitals and health care systems.
"Alaris has an excellent reputation in the acute care marketplace and will further expand Cardinal Health's product and service offerings to this very strategic market," said Cardinal CEO Robert D. Walter. "The company is a terrific fit with Cardinal Health and we see a significant opportunity for marketing, sales and operational synergies in the combined company."
On Wednesday, Alaris jumped $3.36, or 18%, to $22.24. Cardinal was flat at $67.52.