CareFusion has signed a definitive agreement to acquire the vital signs division of GE Healthcare for $500m as part of its strategic plans to expand its respiratory care and anaesthesiology businesses.
The acquisition for the Vital Signs business in the US, China and other countries is expected to be closed by the end of December, with the full deal closing by 31 March 2014, pending regulatory approvals.
The acquisition of Vital Signs will mark CareFusion's eighth acquisition since 2010.
Vital Signs is a manufacturer of single-patient-use consumables for respiratory care and anaesthesiology with annual revenue of approximately $250m. The company also markets products for temperature management and patient monitoring consumables.
Following Vital Signs acquisition, CareFusion will now become a full-line provider of more than 20,000 single-use consumables for respiratory care and anaesthesiology, including circuits for oxygen and anaesthesia, humidification, masks, filters, pressure infusers and temperature management products.
CareFusion chairman and CEO Kieran T Gallahue said the acquisition of Vital Signs is well-aligned to company's long-term growth strategy, helping it create scale in its procedural solutions and increase its presence outside 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 said.
With approximately one-third of its revenue coming from customers outside the US, CareFusion sees opportunities to improve top and bottom-line results by increasing international product sales through Vital Signs' complementary infrastructure outside the US and by leveraging CareFusion's operational infrastructure.
GE Healthcare's Healthcare Systems division president and CEO Tom Gentile added: "We believe CareFusion is equipped to unlock the growth potential of Vital Signs with a solid focus and strategy around medical consumables."
Synergies from the transaction are expected to reach $10m to $15m a year on a pretax basis by fiscal 2017.
CareFusion also estimated the acquisition will increase its adjusted diluted per-share earnings in the next fiscal year by five cents to eight cents.
Vital Signs employs more than 1,000 workers including a manufacturing operation in Shenzhen, China, and a global, field-based sales organisation.
According to GlobalData estimates, the US vital sign monitors market was valued at $180m in 2012 and is expected to grow at a CAGR of 2.8% to reach $218m by 2019.