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The Deal: CareFusion Slips on GE Vital Signs Purchase

Tickers in this article: CFN GE
NEW YORK (TheStreet) -- Healthcare product manufacturer CareFusion  said Monday, Nov. 18, it would acquire the Vital Signs division of General Electric's  health division in a deal valued at about $500 million.

Vital Signs makes single-patient-use consumables for respiratory care and anesthesiology as well as products for temperature management and patient monitoring consumables. San Diego-based CareFusion said the unit will expand its disposables business by adding to its global reach and to its product portfolio.

CareFusion shares were dropping 1% to $38.80 in mid-day trading while General Electric was adding 0.9% to $27.45.

About one-third of CareFusion's $250 million in annual sales comes from outside of the United States. The vital signs unit is based in Totowa, N.J., and employs more than 1,000 worldwide including at a manufacturing center in Shenzhen, China.

"The acquisition of vital signs is well-aligned to our long-term growth strategy, helping us create scale in our procedural solutions call points and increase our presence outside of the United States," CareFusion chairman and CEO Kieran T. Gallahue said in a statement. "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."

CareFusion estimates that the annual global market for respiratory and anesthesia consumables is more than $3 billion. The company said it expects to extract upwards of $15 million in annual synergies from the deal by its fiscal 2017.

The deal is CareFusion's eighth acquisition since 2010. The company acquired Rowa Automatisierungssysteme GmbH for $150 million in 2011 and spent $225 million for Medegen a year prior, while also selling its international surgical products distribution business to Medline Industries for $130 million.

Fairfield, Conn.-based GE said that the sale would allow it to focus on its medical device business. "We believe CareFusion is equipped to unlock the growth potential of Vital Signs with a solid focus and strategy around medical consumables," said GE healthcare division president Tom Gentile.

--By Lou Whiteman in Atlanta