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Cardinal to buy Allegiance
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October 9, 1998: 8:20 a.m. ET
Health companies to join forces in $4.5 billion stock deal
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NEW YORK (CNNfn) - Cardinal Health, Inc. and Allegiance Corp. announced Friday they would join forces in a $4.5 billion stock deal to create the country's biggest provider of healthcare products.
The deal comes just two months after Cardinal was forced to call off a $2.6 billion merger with Bergen Brunswig Corp.
Included in the Allegiance deal, Dublin, Ohio-based Cardinal Health will assume $890 million in long-term debt.
Allegiance shareholders will receive 0.415 Cardinal common shares for each share of Allegiance common stock, with Cardinal issuing approximately 49 million fully diluted shares.
The transaction gives Cardinal the option to purchase up to 19.9 percent of Allegiance's outstanding common shares under certain circumstances.
The merger, which is subject to approval by the companies' shareholders as well as regulatory clearances, is expected to be completed in the first half of 1999.
The combination has been structured as a tax-free transaction and will be accounted for as a pooling of interests.
Cardinal Health chairman and chief executive officer Robert Walter will retain his current position under the agreement.
The company's board of directors will be expanded to include members of Allegiance's current board of directors.
The combined $21 billion company will continue to be called Cardinal Health, Inc. and its corporate headquarters will remain in Dublin, Ohio. Allegiance will operate as a wholly owned subsidiary of Cardinal Health, retaining its management team, its name, and its headquarters in McGaw Park, Illinois.
Shares of Cardinal (CAH) fell 3-1/16 to 92-11/16 on the New York Stock Exchange Thursday, while Allegiance Corp. (AEH) dropped 1-7/8 to 23. 
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Allegiance Corp.
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