In Hospital Supply, Signs of an M&A Renaissance?

Executive Summary

Cardinal Health's acquisition of IV-pump specialist Alaris Medical Systems certainly came as no surprise. The company had been reportedly on the blocks for years. But the fact that Alaris fetched few takers was, certainly on some level, a reflection of the depressed prospects for hospital supply companies and, in turn, for M&A activity. Joining forces with Cardinal brings Alaris into the broader context of a bundled offering, and in the process, also reaffirms the value inherent in today's hospital supply marketplace. Teleflex's acquisition of Hudson Respiratory Care for $460 million marks a potentially more interesting deal. Teleflex officials have been looking for years for new properties to acquire, as part of a broader effort to build up and around their core businesses in wound closure and surgical instruments. The two deals taken together--Cardinal's acquisition of Alaris and Teleflex's of Hudson--suggest that deal-making in hospital supply is far from dead and may, in the future, be done from a business-building, rather than a business-fleeing posture.