updated 5/19/2004 10:40:58 AM ET 2004-05-19T14:40:58

The drug wholesaler and distributor Cardinal Health Inc. said on Wednesday that it has agreed to pay $1.6 billion for Alaris Medical Systems Inc., a maker of intravenous medication products and services.

The company said the deal will increase Cardinal Health’s range of health care products and bring the company to foreign markets.

Cardinal, based in this Columbus suburb, ships more than 1 million products daily to hundreds of hospitals, pharmacies and health care providers.

San Diego-based Alaris operates in 13 countries, and more than 30 percent of its revenue is from countries outside the United States. Alaris employs 3,000 people and makes products at four facilities in North America and Europe.

Its core product is an infusion pump that administers intravenous medication. The system’s associated supplies account for two-thirds of sales.

Cardinal Health will buy outstanding shares of Alaris common stock at $22.35 per share, an 18.4 percent premium over Alaris’ closing price on Tuesday. Cardinal Health will also assume about $400 million in debt.

Alaris’ majority shareholder, San Diego investor Jeffry Picower, has agreed to give up his 65 percent holding to the tender offer, according to a news release.

Both companies’ boards of directors unanimously approved the deal. The transaction was expected to be completed in Cardinal Health’s fourth quarter, ending June 30.

In morning trading on the New York Stock Exchange, Alaris shares were up $3.34, or 17.8 percent, to $22.22 while Cardinal Health shares were up 58 cents at $68.10.

“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, Cardinal Health chairman and chief executive.

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