Executives at suitor Cardinal Health see opportunities to better deliver interventional cardiology and endovascular devices to health providers.

Chris Newmarker

Cardinal Health has made a nearly $2 billion nonbinding offer to acquire Johnson & Johnson Cordis business, the two companies said Monday.

Based in Fremont, CA, Cordis is a $780 million-a-year business, with sales split almost evenly between cardiology devices such as sheaths, wires and guides, and balloons, and endovascular products including both self-expanding and balloon-expanding stents.

Cardinal Health (Columbus, OH) has a strategy of seeking standardization and cost-effective delivery of mature medical devices in areas including cardiology, wound management, and orthopedics. In the cardiology space, Cardinal already spent $320 million last year to acquire AccessClosure Inc. (Santa Clara, CA) and its Mynx family of patient-friendly vascular closure devices. Purchasing Cordis would further Cardinal's goals even more.

"With an aging population and the accompanying demand for less invasive medical treatments, health systems around the world are searching for the best way to bring quality care to their patients in the most cost-effective way," Cardinal Health's chairman and CEO George Barrett said in a news release. "The acquisition of Cordis reinforces our strategic position to address this need and strengthens an important growth driver in the Cardinal Health portfolio."

For Johnson & Johnson (New Brunswick, NJ), the deal goes along with the medtech giant's strategy of streamlining its business. Last year, J&J sold its Ortho-Clinical Diagnostics (OCD) business to The Carlyle Group for approximately $4 billion. The new Medtronic plc created out of the merger of Medtronic and Covidien is now rivaling J&J as the largest medical device company in the world.

"This initiative is part of our ongoing disciplined portfolio management approach to focus on our most promising opportunities to help patients and drive growth," said Gary Pruden, worldwide chairman of J&J's Global Surgery Group.

Johnson & Johnson has until May 30 to decide whether to accept Cardinal Health's offer. Discussions are planned with relevant works councils and trade unions. Should J&J accept, the deal is expected to close toward the end of 2015, subject to customary closing conditions and regulatory approvals.

Chris Newmarker is senior editor of Qmed and MPMN. Follow him on Twitter at @newmarker.

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