8-KMaterial AgreementsFinancial EventsOther Events+1

CARDINAL HEALTH INC 8-K Report, Material Agreement (Jul 16, 2009)

Filed July 16, 2009For Securities:CAH

Summary

This 8-K filing from Cardinal Health, Inc. (CAH) announces two significant events for investors: the pricing of a $1.4 billion debt offering by its subsidiary, CareFusion, and the approval of the spin-off of CareFusion. The proceeds from the CareFusion debt offering are earmarked to fund a special dividend to Cardinal Health shareholders in connection with the spin-off, which is expected to distribute at least 80.1% of CareFusion's stock. The spin-off is anticipated to occur around August 31, 2009. Additionally, Cardinal Health disclosed estimated pre-tax costs associated with the spin-off, totaling approximately $261 million, which include transaction, employee-related, and separation costs. A portion of these costs have already been incurred, with the remainder expected over fiscal years 2010 and beyond. The company also anticipates a tax charge of approximately $150 million related to overseas cash repatriation. These financial implications are crucial for understanding the immediate and future financial impact on Cardinal Health.

Key Highlights

  • 1CareFusion, a Cardinal Health subsidiary, priced a $1.4 billion senior notes offering across three tranches (2012, 2014, and 2019 maturities) with interest rates ranging from 4.125% to 6.375%.
  • 2The net proceeds of approximately $1.374 billion from the notes offering will be used to pay a special dividend to Cardinal Health shareholders.
  • 3This dividend is in anticipation of Cardinal Health's planned spin-off of CareFusion, where at least 80.1% of CareFusion's common stock will be distributed to Cardinal Health shareholders.
  • 4The spin-off is scheduled to occur after the close of trading on August 31, 2009, with a record date of August 25, 2009.
  • 5Cardinal Health estimates total pre-tax costs for the spin-off at approximately $261 million, with $113 million incurred in fiscal 2009 and the remainder expected in fiscal 2010 and beyond.
  • 6These spin-off costs are categorized into transaction costs ($44M), employee-related costs ($83M), functional area separation ($87M), and other costs ($47M).
  • 7Cardinal Health also anticipates a pre-tax charge of approximately $150 million related to repatriating overseas cash.

Frequently Asked Questions

The debt offering by CareFusion is primarily to fund a special dividend to Cardinal Health shareholders. This dividend is a component of the planned spin-off of CareFusion from Cardinal Health.

The distribution of CareFusion shares to Cardinal Health shareholders is expected to occur after the close of trading on August 31, 2009. The record date for shareholders entitled to receive the distribution is August 25, 2009.

Cardinal Health estimates total pre-tax costs of approximately $261 million for the spin-off. These costs cover transaction expenses, employee-related costs, functional area separation, and other expenses. A significant portion of these costs are expected to be incurred in fiscal years 2010 and beyond.

Yes, Cardinal Health also anticipates a tax charge of approximately $150 million, pre-tax, related to the repatriation of a portion of its overseas cash. The estimates for spin-off costs are subject to change.