June 5, 2015 – Bloomberg – Cardinal Health Inc. said it will buy the Harvard Drug Group from Court Square Capital Partners for $1.12 billion to increase its distribution of generic drugs.
Cardinal Health will fund the acquisition with cash and new debt, the Dublin, Ohio-based company said Friday in a statement. The purchase will add more than 15 cents to earnings per share from continuing operations in fiscal-year 2016, it said.
Harvard Drug Group, a Livonia, Michigan-based distributor of generic drugs and over-the-counter remedies, had revenue of about $450 million last year, according to the statement. The purchase will also bolster Cardinal Health’s telesales capabilities and add specialized packaging options desired by hospitals.
“We view the transaction as ‘right down the middle’ given the obvious strategic rationale and attractive financial considerations,” said Ross Muken, an analyst with Evercore-ISI. “This should prove to be a welcome surprise.”
Cardinal Health agreed in March to buy Johnson & Johnson’s Cordis business for about $1.94 billion, bulking up the medical distributor’s device-making capabilities. It plans to issue $1.5 billion in new debt to fund the Cordis and Harvard Drug Group purchases.
Cardinal Health fell 1.5 percent to $86.34 at 9:37 a.m. in New York. The drug distributor’s shares have advanced 24 percent in the past 12 months, as of Thursday’s close, giving the company a market value of $29 billion.
Court Square Capital Partners, a New York-based private-equity firm, bought Harvard Drug Group in 2010 for an undisclosed price. Cardinal Health’s purchase is expected to be completed in the year ending in June 2016, the company said.
The law firm Jones Day advised Cardinal Health on the deal, while Harvard Drug Group was advised by Dechert LLP. Credit Suisse Group AG served as Harvard Drug Group’s financial adviser.
Source: Bloomberg, David Risser