DUBLIN, Ohio and SAN DIEGO -- Cardinal Health, Inc., a leading provider of products and services supporting the healthcare industry, and ALARIS Medical Systems, Inc., a global leader in intravenous medication safety products and
services, today announced a definitive agreement for Cardinal Health to
acquire ALARIS in a transaction valued at approximately $2 billion, including
the assumption of outstanding debt.
Under the agreement, Cardinal Health has agreed to make a cash tender
offer to acquire all of the outstanding shares of ALARIS common stock at a
price of $22.35 per share.
The acquisition will extend Cardinal Health's portfolio of market-leading
products and services to healthcare providers, and increase its presence in
strategic markets outside the United States. ALARIS develops and markets
systems for the safe delivery of intravenous (IV) medications, and holds long-
term contracts to provide necessary, disposable products for use in those
systems. Nearly two-thirds of ALARIS' revenues are 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 worldwide.
With complementary operations, product lines, distribution networks and
geographic presence, the acquisition will enable Cardinal Health to:
- Broaden integrated product and service offerings: ALARIS products and
services fully complement Cardinal Health's integrated provider
solutions for healthcare customers, with proprietary medical products,
distribution services, consulting services and automation technology.
In 2003, ALARIS launched 19 new products into this market and expects to
launch at least 20 more in 2004. These highly automated, proprietary
systems with patented technology are used by the same hospital and
provider customers that use Cardinal Health products and services.
- Better serve customers globally: ALARIS' established, global operations
with direct sales representatives, nurse trainers and field technicians
in 13 countries provide an experienced channel for Cardinal Health's
extensive portfolio of health care products and services. More than 30
percent of ALARIS' revenue is from customers outside the U.S., and
worldwide ALARIS products are used by more than 5,000 hospital
customers. The company is ranked No. 1 or 2 in most of the countries in
which it operates. ALARIS employs 3,000 people and manufactures
products at 4 facilities in North America and Europe.
- Deliver the most comprehensive suite of medication safety solutions:
ALARIS' bedside safety offerings in IV medication and infusion therapy
complement Cardinal Health's medication safety offerings at the
patient's bedside. One recent study indicated that medication errors
occur in as many as 1 of every 5 doses given to patients. Both leaders
in their respective markets, Cardinal Health's Pyxis automation systems
and ALARIS' bedside infusion systems have pioneered many of the
technological advances made in the field of medication safety.
Combined, Cardinal Health will have the capability to dispense a
comprehensive array of medication dosage forms delivered at a patient's
"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 Robert D. Walter, chairman and chief executive officer
of Cardinal Health. "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."
The synergies from this transaction will be immediate and are expected to
reach $80 to $100 million of earnings on a pretax basis by the end of fiscal
year 2007. Cardinal Health has already identified these planned synergies,
which are driven by revenue enhancement opportunities and through leverage of
existing infrastructures. As a result, Cardinal Health expects the
transaction to be modestly accretive in its fiscal year 2005 and meaningfully
accretive by fiscal year 2007.
"The market for the IV medication safety products we pioneered is vast and
growing worldwide," said David L. Schlotterbeck, president and chief executive
officer of ALARIS Medical Systems. "Our senior management and exceptional
employee teams are looking forward to the important role we will play as part
of Cardinal Health."
Upon completion of the acquisition, Schlotterbeck will continue to lead
ALARIS operations, reporting to Cardinal Health president and COO George L. Fotiades.
"Markets outside the U.S. -- especially Western Europe -- represent a
major growth opportunity for Cardinal Health," Fotiades said. "We expect
ALARIS' experienced, direct sales and service organization will become an
important channel for many of our products in these regions."
The ALARIS Medical Systems Medley Medication Safety System is a
modular point-of-care computer that integrates infusion, patient monitoring
and clinical best practice guidelines in a single platform for optimal
outcomes. Key to the system is the ALARIS Guardrails Safety Software, a
proprietary offering that supports hospitals in the design, implementation and
analysis of clinical best practices to improve medication safety and clinical
The ALARIS product line also includes the Gemini, Signature Edition,
MedSystems and Asena large-volume pumps and syringe infusion pumps;
ReadyMED ambulatory infusion pumps; disposable administration sets, which
contain the necessary needle-free devices and supplies for infusion systems;
and a range of patient monitoring devices, including sophisticated,
proprietary thermometers and associated disposables.
ALARIS offers a comprehensive set of value-added services, including
hardware and software technical assistance, clinical education, implementation
services, facilitation of database development -- critical for medication
safety initiatives -- and software maintenance programs.
Upon completion of the merger, ALARIS will become a wholly owned
subsidiary of Cardinal Health. The agreement has been unanimously approved by
both companies' boards of directors. The transaction is expected to be
completed in Cardinal Health's fourth quarter of fiscal year 2004, ending June
Source: Cardinal Health, Inc.