Cardinal Health close to buying Medtronic's medical supplies business for around $6 bn

Cardinal Health Inc, the second-biggest drug distributor in the US, is close to finalising a deal to buy Medtronic Plc's medical supplies business for close to $6 billion, Reuters yesterday reported, citing people familiar with the matter.

Medtronic and Cardinal Health have entered into exclusive talks over the sale of the business, and a deal could be announced later this month, the report said.

Most of Medtronic medical supplies business had come into its portfolio through its 2014 acquisition of Covidien Plc for $42.9 billion.

Medtronic medical supplies had earnings before interest, taxes, depreciation and amortization of about $500 million. A sale is likely to fetch a multiple of eight to 10 times that amount.

Covidien's medical supplies unit accounted for $1.6 billion of the company's $10.7 billion in 2014 annual sales, while Medtronic's medical supplies business generated $4.3 billion in revenue during Medtronic's 2016 fiscal year.

The medical-supplies business sells everything from needles and catheters to monitoring equipment and medical instruments.

Medtronic CEO Omar Ishrak had earlier said that the company was evaluating which Covidien assets fit well with Medtronic's long-term plans.

With a market cap of $25.23 billion, Cardinal Health is a health care services company serving pharmacies, hospitals, ambulatory surgery centers, clinical laboratories and physicians.

The Ohio-based company provides pharmaceuticals and medical products and services to more than 100,000 locations each day and is also the industry-leading direct-to-home medical supplies distributor.

It is also a leading manufacturer of medical and surgical products, including gloves, surgical apparel and fluid management products.

In addition, the company operates the largest network of radiopharmacies in the US that dispense products to aid in the early diagnosis and treatment of disease.