Cardinal Health said on Friday in a statement it will buy Harvard Drug Group for $1.2 billion to increase its generic drug distribution. Bloomberg writes that 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. 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 company added that the acquisition would bring specialized packaging offerings to its portfolio of products, such as gloves and surgical apparel, that it offers to hospital systems and institutions, notes the Wall Street Journal.
The company will fund the deal with existing cash and new debt. It expects to issue $1.5 billion of new debt related to these two acquisitions, reports Reuters.