CAH » Topics » Reasons for the Spin-Off

This excerpt taken from the CAH 8-K filed Nov 16, 2009.

Reasons for the Spin-Off

The Company’s Board of Directors determined that separating the clinical and medical products businesses from the remainder of the Company was in the best interests of the Company and its shareholders because such separation is expected to:



improve strategic planning, increase management focus and streamline decision-making by providing the flexibility to implement the unique strategic plans of each company and to respond more effectively to different customer needs of each company and the changing economic environment;



allow each of the Company and CareFusion to adopt the capital structure, investment policy and dividend policy best suited to each business’ financial profile and business needs, as well as resolve the current competition for capital among the Company and its investors; and



facilitate incentive compensation arrangements for employees more directly tied to the performance of the relevant company’s business, and enhance employee hiring and retention by, among other things, improving the alignment of management and employee incentives with performance and growth objectives, while at the same time creating an independent equity structure that will facilitate CareFusion’s ability to effect future acquisitions utilizing its common stock.

The Company’s Board of Directors considered a number of potentially negative factors in evaluating the separation, including risks relating to the creation of a new public company, possible increased costs and one-time separation costs, but concluded that the potential benefits of the Spin-Off outweighed these factors.

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