Item 1.01 Entry into a Material Definitive Agreement.
Purchase Agreement
On April 18, 2017, Cardinal Health,
Inc., an Ohio corporation (the Company), and Medtronic plc, an Irish public limited company (Medtronic), entered into a definitive stock and asset purchase agreement (the Purchase Agreement) pursuant to which,
among other things, the Company will purchase certain equity interests and assets collectively constituting the Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency businesses of Medtronic (the Business), for a purchase price
of $6.1 billion in cash, subject to certain adjustments (the Acquisition).
Pursuant to the Purchase Agreement, subject to the terms and
conditions set forth therein, the Company would acquire from Medtronic, among other things, (i) twelve manufacturing plants located in North America; (ii) two manufacturing plants located in Europe; and (iii) three manufacturing
plants located in Asia.
The Purchase Agreement provides that closing of the Acquisition is subject to the satisfaction or waiver of certain conditions,
including, among other things, the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of antitrust approvals in certain other specified
jurisdictions
.
The Purchase Agreement contains certain termination rights, including that either party will be permitted to terminate (i) in
connection with certain material breaches by the other party of the other partys representations, warranties or covenants, subject to a cure period, (ii) if the closing has not occurred on or before January 18, 2018; provided, that
if the only remaining unsatisfied conditions to closing at such date relate to certain antitrust matters, such date will automatically extend to April 18, 2018 (the Outside Date) or (iii) if at any time prior to closing, the
conditions precedent to the performance of a partys obligations at the closing will have become incapable of fulfillment by the Outside Date. The Company and Medtronic have each agreed, subject to specified conditions and limitations, to
indemnify the other party for breaches of representations, warranties and covenants and for losses arising from certain assumed/excluded liabilities and certain tax matters, as applicable.
Investors should not rely on the representations, warranties and covenants in the Purchase Agreement or any descriptions thereof as characterizations of the
actual state of facts or condition of the Company, any of its subsidiaries or affiliates, or the Business. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement,
which subsequent information may or may not be fully reflected in the Companys public disclosures.
Commitment Letter
The Company plans to issue long-term debt to finance the Acquisition. In connection with the Company entering into the Purchase Agreement, on April 18,
2017, the Company entered into a commitment letter (the Commitment Letter) with Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC (the Commitment Parties) pursuant to which, subject to the terms and conditions set
forth therein, the Commitment Parties have committed to provide a
364-day
senior unsecured bridge term loan facility in an aggregate principal amount of up to $4.5 billion (the Bridge
Facility), the proceeds of which may be used for the payment of the purchase price contemplated by, and the payment of fees and expenses incurred in connection with, the Purchase Agreement. The commitment to provide the Bridge Facility is
subject to certain conditions, consistent with the Purchase Agreement and the Commitment Letter. The Company will pay customary fees and expenses in connection with obtaining the Bridge Facility. The definitive agreement for the Bridge Facility will
contain, among other terms, affirmative covenants, negative covenants, financial covenants and events of default, in each case to be negotiated by the parties consistent with the Commitment Letter. Neither the closing of the Bridge Facility nor the
receipt of any other financing is a condition to the closing of the Acquisition.
From time to time, the Commitment Parties or their affiliates have
performed, and may in the future perform, various commercial banking, investment banking and other financial advisory services for the Company, for which the Company pays customary fees and expenses. Goldman Sachs Bank USA is a member of the lending
syndicate
under the Companys $1.75 billion revolving credit facility and Goldman Sachs & Co. serves as a dealer under the Companys commercial paper program. In addition, Goldman,
Sachs & Co. served as one of the Companys financial advisors in connection with the proposed Acquisition.
The foregoing description of the
Purchase Agreement and the Commitment Letter and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement attached hereto as Exhibit 2.1 and
the Commitment Letter attached hereto as Exhibit 10.1, both of which are incorporated herein by reference.