CareFusion ($CFN) is handing over $500 million for GE Healthcare's ($GE) Vital Signs arm, an acquisition it said will make it a giant in the respiratory and anesthesia consumables business but also fuel a broader global expansion.
Plans call for completing the deal in the U.S., China and "certain other countries" by the end of 2013, with an overall wrap-up by March 31, 2014, pending regulatory approvals.
With this deal, San Diego-based CareFusion gains consumables and products targeted toward respiratory care, anesthesiology, temperature management and patient monitoring. CareFusion products in the space will now surpass 20,000 in number, according to the M&A announcement, including masks, filters, pressure infusers and circuits for oxygen and anesthesia. The agreements will expand upon the company's existing specialty disposables business, which until now had been more of a distributor than manufacturer of its own products.
"The acquisition of Vital Signs is well aligned to our long-term growth strategy," CareFusion Chairman and CEO Kieran Gallahue said in a statement. He said that the combination will help drive innovation, spur growth investment and "better support customers in major geographic markets."
To make this happen, CareFusion said it will use the Vital Signs division's "complementary" international sales force to boost global sales of products it already has. CareFusion's current product roster includes infusion pumps, automated medication dispensing and patient identification systems, ventilation and respiratory devices and surgical instruments, among other medical devices and equipment.
So why is GE Healthcare, a developer of medical imaging equipment and other devices, selling the line? The answer involves a decision to focus "on its core strengths as a provider of medical device solutions," Tom Gentile, president and CEO of GE Healthcare's Healthcare Systems division, said in a statement.
"We believe CareFusion is equipped to unlock the growth potential of Vital Signs with a solid focus and strategy around medical consumables," he said.
CareFusion said that the respiratory and anesthesia consumables market is worth more than $3 billion globally.
While CareFusion's bid for expansion is impressive, the move is also about generating new growth through acquisitions even as other product lines have slipped. The company, for example, has faced regulatory woes for a long time. CareFusion experienced three Class I FDA recalls so far in 2013, one involving its AVEA ventilators and two others tied to its Alaris line of infusion pumps.
Revenue also slipped for the company's respiratory technology and infusion pumps in the fiscal year that ended June 30, 2013.
Earlier this summer, CareFusion was a reported bidder for ICU Medical ($ICUI), but ICU pulled back from plans to sell itself.
- read the release