8-KMaterial AgreementsOther EventsExhibits & Filings

CARDINAL HEALTH INC 8-K Report, Agreement Terminated (Jun 12, 2017)

Filed June 12, 2017For Securities:CAH

Summary

Cardinal Health Inc. (CAH) filed an 8-K on June 12, 2017, primarily to disclose two significant financial events. Firstly, the company announced its intent to terminate a previously established commitment letter with Goldman Sachs for a bridge facility. This termination, effective June 13, 2017, suggests that Cardinal Health has secured alternative financing or no longer requires the bridge loan originally intended to support a major acquisition. Secondly, and more critically for investors, the filing details the closing of a substantial debt offering totaling $5.25 billion. This offering comprised various notes with maturities ranging from 2019 to 2047, including fixed-rate and floating-rate instruments. The proceeds from this debt offering are likely to fund the previously announced $6.1 billion acquisition of Medtronic plc's Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses, as indicated by the reference to Goldman Sachs' role as a financial advisor in that transaction.

Key Highlights

  • 1Cardinal Health is terminating a previously arranged bridge facility commitment with Goldman Sachs, effective June 13, 2017.
  • 2The company successfully completed a large debt offering totaling $5.25 billion on June 12, 2017.
  • 3The debt offering consists of multiple tranches of notes with varying maturities (2019, 2022, 2024, 2027, and 2047) and interest rates.
  • 4Specific note issuances include $1 billion in 1.948% notes due 2019 and $1.15 billion in 2.616% notes due 2022.
  • 5A significant portion of the debt offering is comprised of 3.410% notes due 2027 ($1.35 billion) and 4.368% notes due 2047 ($600 million).
  • 6The debt offering was underwritten by a syndicate of major financial institutions including Goldman Sachs, Merrill Lynch, MUFG Securities Americas, and Wells Fargo Securities.
  • 7The substantial proceeds from the debt offering are likely intended to finance the previously announced $6.1 billion acquisition of Medtronic's patient care businesses.

Frequently Asked Questions

The termination of the commitment letter suggests that Cardinal Health has secured alternative financing or has decided not to proceed with the specific financing arrangement initially planned. It could also indicate that the planned use of the bridge facility, likely related to the Medtronic acquisition, is being funded through other means, such as the large debt offering disclosed in this filing.

Cardinal Health raised a total of $5.25 billion through the issuance of various notes in this debt offering.

While not explicitly stated as the sole purpose, the timing and scale of this debt offering strongly indicate that the proceeds are intended to fund the previously announced $6.1 billion acquisition of specific businesses from Medtronic plc. The filing mentions Goldman Sachs' role as a financial advisor in that acquisition.

Cardinal Health issued several types of notes: 1.948% notes due 2019 ($1 billion), 2.616% notes due 2022 ($1.15 billion), floating rate notes due 2022 ($350 million), 3.079% notes due 2024 ($750 million), 3.410% notes due 2027 ($1.35 billion), and 4.368% notes due 2047 ($600 million).