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CareFusion to acquire Vital Signs division of GE Healthcare

CareFusion, a global medical technology company, has announced the signing of a definitive agreement for CareFusion to acquire the Vital Signs division of GE Healthcare for $500m.

With annual revenue of approximately $250m, Vital Signs is a manufacturer of single-patient-use consumables for respiratory care and anesthesiology. The company also markets products for temperature management and patient monitoring consumables.

The acquisition will significantly expand CareFusion’s Specialty Disposables business by adding global scale and new products for anesthesiology.

CareFusion chairman and CEO Kieran T Gallahue noted the acquisition of Vital Signs is well-aligned to the company’s long-term growth strategy, helping it create scale in its Procedural Solutions call points and increase the company’s presence outside of the US.

"Together, CareFusion and Vital Signs have the R&D, manufacturing and go-to-market resources to drive innovation, invest for growth and better support customers in major geographic markets," Gallahue added.

With complementary product lines and geographies, the acquisition will enable CareFusion to:

– Better serve customers globally: With approximately one-third of its revenue coming from customers outside the US, Vital Signs will advance CareFusion’s goal to expand in international markets. The combined sales force will have deep customer and clinical expertise in major global markets.

– Accelerate the transformation of the Specialty Disposables business from a distributor to a vertically integrated manufacturer: With the addition of the Vital Signs portfolio, CareFusion will become a full-line provider of more than 20,000 single-use consumables for respiratory care and anesthesiology, including circuits for oxygen and anesthesia, humidification, masks, filters, pressure infusers and temperature management products.

– Create clear synergy opportunities: Synergies from the transaction are expected to reach $10- $15m per year on a pretax basis by fiscal 2017. CareFusion sees opportunities to improve top- and bottom-line results by increasing international product sales through Vital Signs’ complementary infrastructure outside of the US and by leveraging CareFusion’s operational infrastructure.

The acquisition is expected to be neutral to modestly accretive to CareFusion adjusted diluted earnings per share in fiscal 2014 and $0.05 to $0.08 accretive in fiscal 2015 excluding amortization of acquired intangible assets, non-cash inventory valuation step-up charges, and nonrecurring restructuring, integration and tax charges.

The company expects continued earnings accretion in fiscal 2016 and longer term.

CareFusion expects to complete the acquisition for the Vital Signs business in the US, China and certain other countries by 31 December 2013, and to finalize the remainder of the transaction during its third quarter, ending 31 March 2014, subject to regulatory review and customary closing conditions.

Upon completion of the transaction, Vital Signs will be CareFusion’s eighth acquisition since 2010.