Cardinal Health to buy Viasys for $1.42 billion

By Susan Kelly

CHICAGO (Reuters) - Cardinal Health Inc. (CAH.N) said on Monday that it would acquire Viasys Healthcare Inc. VAS.N, which makes medical products for respiratory care and other uses, for about $1.42 billion.

Cardinal Health, one of the top three U.S. drug distributors, plans to make a cash tender offer for Viasys for $42.75 per share. That is a roughly 35 percent premium over Viasys' closing stock price on Friday, but the shares rose slightly above the offering price in morning trading.

The deal would expand Cardinal's reach in the acute-care and surgical arenas and strengthen the company's presence overseas.

"We think that this is a logical acquisition for the company as it continues to broaden its product offering in an effort to own the entire ICU setting," said Deutsche Bank analyst Barbara Ryan in a note to clients. She rates the stock at "buy."

The deal is worth $1.42 billion, based on 33,279,330 Viasys shares outstanding listed in the company's most recent quarterly filing. Including the assumption of debt, Cardinal would pay $1.5 billion.

Viasys, which had revenue of $610 million last year, focuses on respiratory, neurology, medical disposable and orthopedic products.

The deal also gives Cardinal, which generates the vast majority of its sales and profits in the United States, a presence in overseas markets that it has sought, analysts said.

"This transaction fits nicely with some of their other offerings," said A.G. Edwards analyst Andrew Speller, who rates the stock "buy." "The thing that probably drew Cardinal to this transaction is the international exposure."