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Cardinal Health Buys Cordis, Fortifies Cardiovascular Hold

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Cardinal Health, Inc.CAH recently completed the acquisition of Johnson & Johnson's Cordis business unit for $1.944 billion which was announced in March this year.

The addition of the Cordis unit will strengthen Cardinal Health's position in the cardiovascular market. The newly acquired business will be integrated into Cardinal Health's Medical Segment.

Notably, Cardinal Health expects the deal to add 20 cents (including 7 to 8 cents of interest expense) to fiscal 2017 adjusted EPS and save $100 million in annual costs by the end of fiscal 2018. However, the acquisition is expected to be somewhat dilutive to adjusted EPS in fiscal 2016.

Headquartered in Fremont, CA, Cordis is a global company with a growing portfolio of endovascular and cardiology products. While the U.S. is its largest single market, Cordis enjoys a significant presence in more than 50 countries, including China, Japan, Germany, Italy, France, the U.K. and Brazil. We believe that the buyout of Cordis will expand Cardinal Health's footprint in the international markets.

Cardinal Health follows an acquisition-driven strategy and continues to focus on investment in key growth businesses to gain market traction and boost profits. In July this year, Cardinal Health completed the acquisition of The Harvard Drug Group ("THDG") for almost $1.12 billion in cash. Notably, the buyout deal was announced in early June.

Over the past five years, the company executed four large acquisitions - AssuraMed (2013), Kinray (2010), Cardinal Health China (2010) and Healthcare Solutions Holding (2010) - which have considerably boosted the company's offerings in diversified fields.

Zacks Rank and Key Picks

Currently, Cardinal Health carries a Zacks Rank #2 (Buy). Other well-placed stocks in the medical sector are Masimo MASI , Thoratec THOR and NuVasive NUVA . While Masimo and Thoratec sport Zacks Rank #1 (Strong Buy), NuVasive has a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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