Summary
Johnson & Johnson (JNJ) announced on March 2, 2015, a significant strategic divestiture: a binding offer from Cardinal Health to acquire its Cordis business for an aggregate value of $1.99 billion. This includes $1.944 billion in cash and $46 million in retained net receivables. The Cordis business is a notable player in interventional vascular technology, generating approximately $780 million in net revenues in 2014. This divestiture signals a strategic shift for Johnson & Johnson, likely focusing resources on its core pharmaceutical and consumer health segments. Investors should note the valuation at approximately 2.5 times Cordis' 2014 revenues. The transaction is subject to customary closing conditions, regulatory approvals, and the conclusion of employee consultations, with an expected closing towards the end of 2015. Further details will be provided during the company's Q1 2015 earnings call.
Key Highlights
- 1Johnson & Johnson enters into a binding offer to sell its Cordis business to Cardinal Health.
- 2The total transaction value is $1.99 billion, comprising $1.944 billion in cash and $46 million in retained net receivables.
- 3Cordis reported approximately $780 million in net revenues for 2014.
- 4The sale price represents a multiple of roughly 2.5 times Cordis' 2014 net revenues.
- 5The transaction is expected to close by the end of 2015, pending customary conditions and approvals.
- 6Employee consultations with works councils and trade unions are a necessary step before acceptance.
- 7Johnson & Johnson will discuss the divestiture further during its April 14, 2015, earnings call.