Cardinal Health to Acquire ALARIS Medical Systems

DUBLIN, Ohio and SAN DIEGO -- Cardinal Health, Inc., a leading provider of products and services supporting the healthcare industry, and ALARIS Medical Systems, Inc., a global leader in intravenous medication safety products and

services, today announced a definitive agreement for Cardinal Health to

acquire ALARIS in a transaction valued at approximately $2 billion, including

the assumption of outstanding debt.

Under the agreement, Cardinal Health has agreed to make a cash tender

offer to acquire all of the outstanding shares of ALARIS common stock at a

price of $22.35 per share.

The acquisition will extend Cardinal Health's portfolio of market-leading

products and services to healthcare providers, and increase its presence in

strategic markets outside the United States. ALARIS develops and markets

systems for the safe delivery of intravenous (IV) medications, and holds long-

term contracts to provide necessary, disposable products for use in those

systems. Nearly two-thirds of ALARIS' revenues are generated by the sale of

proprietary disposable supplies. It also provides a broad suite of

professional, technical and training services to more than 5,000 hospitals and

health care systems worldwide.

With complementary operations, product lines, distribution networks and

geographic presence, the acquisition will enable Cardinal Health to:

- Broaden integrated product and service offerings: ALARIS products and

services fully complement Cardinal Health's integrated provider

solutions for healthcare customers, with proprietary medical products,

distribution services, consulting services and automation technology.

In 2003, ALARIS launched 19 new products into this market and expects to

launch at least 20 more in 2004. These highly automated, proprietary

systems with patented technology are used by the same hospital and

provider customers that use Cardinal Health products and services.

- Better serve customers globally: ALARIS' established, global operations

with direct sales representatives, nurse trainers and field technicians

in 13 countries provide an experienced channel for Cardinal Health's

extensive portfolio of health care products and services. More than 30

percent of ALARIS' revenue is from customers outside the U.S., and

worldwide ALARIS products are used by more than 5,000 hospital

customers. The company is ranked No. 1 or 2 in most of the countries in

which it operates. ALARIS employs 3,000 people and manufactures

products at 4 facilities in North America and Europe.

- Deliver the most comprehensive suite of medication safety solutions:

ALARIS' bedside safety offerings in IV medication and infusion therapy

complement Cardinal Health's medication safety offerings at the

patient's bedside. One recent study indicated that medication errors

occur in as many as 1 of every 5 doses given to patients. Both leaders

in their respective markets, Cardinal Health's Pyxis automation systems

and ALARIS' bedside infusion systems have pioneered many of the

technological advances made in the field of medication safety.

Combined, Cardinal Health will have the capability to dispense a

comprehensive array of medication dosage forms delivered at a patient's

bedside.

"ALARIS has an excellent reputation in the acute care marketplace and will

further expand Cardinal Health's product and service offerings to this very

strategic market," said Robert D. Walter, chairman and chief executive officer

of Cardinal Health. "The company is a terrific fit with Cardinal Health and

we see a significant opportunity for marketing, sales and operational

synergies in the combined company."

The synergies from this transaction will be immediate and are expected to

reach $80 to $100 million of earnings on a pretax basis by the end of fiscal

year 2007. Cardinal Health has already identified these planned synergies,

which are driven by revenue enhancement opportunities and through leverage of

existing infrastructures. As a result, Cardinal Health expects the

transaction to be modestly accretive in its fiscal year 2005 and meaningfully

accretive by fiscal year 2007.

"The market for the IV medication safety products we pioneered is vast and

growing worldwide," said David L. Schlotterbeck, president and chief executive

officer of ALARIS Medical Systems. "Our senior management and exceptional

employee teams are looking forward to the important role we will play as part

of Cardinal Health."

Upon completion of the acquisition, Schlotterbeck will continue to lead

ALARIS operations, reporting to Cardinal Health president and COO George L. Fotiades.

"Markets outside the U.S. -- especially Western Europe -- represent a

major growth opportunity for Cardinal Health," Fotiades said. "We expect

ALARIS' experienced, direct sales and service organization will become an

important channel for many of our products in these regions."

The ALARIS Medical Systems Medley Medication Safety System is a

modular point-of-care computer that integrates infusion, patient monitoring

and clinical best practice guidelines in a single platform for optimal

outcomes. Key to the system is the ALARIS Guardrails Safety Software, a

proprietary offering that supports hospitals in the design, implementation and

analysis of clinical best practices to improve medication safety and clinical

productivity.

The ALARIS product line also includes the Gemini, Signature Edition,

MedSystems and Asena large-volume pumps and syringe infusion pumps;

ReadyMED ambulatory infusion pumps; disposable administration sets, which

contain the necessary needle-free devices and supplies for infusion systems;

and a range of patient monitoring devices, including sophisticated,

proprietary thermometers and associated disposables.

ALARIS offers a comprehensive set of value-added services, including

hardware and software technical assistance, clinical education, implementation

services, facilitation of database development -- critical for medication

safety initiatives -- and software maintenance programs.

Upon completion of the merger, ALARIS will become a wholly owned

subsidiary of Cardinal Health. The agreement has been unanimously approved by

both companies' boards of directors. The transaction is expected to be

completed in Cardinal Health's fourth quarter of fiscal year 2004, ending June

30, 2004.

Source: Cardinal Health, Inc.