McKesson in $8.3 Billion Deal with German Firm to Create Global Leader in Drug Wholesaling

LONDONâ€"The San Francisco health care services firm McKesson Corporation said Thursday that it had agreed to acquire a controlling stake in Germany’s Celesio and will launch a tender offer for its remaining shares in a deal valued at $8.3 billion.

The deal would create one of the world’s largest pharmaceutical wholesalers and providers of logistics and services in the health care sector, with annual revenues of more than $150 billion and about 81,500 employees worldwide. The combined company would operate in 20 countries.

“The health care industry is evolving rapidly, marked by convergence between segments and increased globalization,” said John H. Hammergren, McKesson’s chairman and chief executive officer. “With today’s announcement, we will bring together the strengths and expertise of each company to address global health care challenges.”

After completing the transaction, McKesson and Celesio will maintain their own brands and continue to support customers through existing channels. Celesio’s operations will be incorporated into McKesson’s Distribution Solutions segment.

As part of the deal, McKesson will acquire a 50.01 percent stake in Celesio from Franz Haniel & Cie, the firm’s majority shareholder. The share purchase has been approved by McKesson’s board and Franz Haniel & Cie’s supervisory board.

It then intends to launch a tender offer to acquire Celesio’s remaining outstanding shares for 23 euros, or $31.76, a share, representing a 39 premium over the three-month average weighted price prior to Oct. 8, when market speculation began that Celesio might be acquired.

The company also will launch a simultaneous tender offer for Celesio’s outstanding convertible bonds. The offers are expected during McKesson’s fiscal third quarter, which ends Dec. 31.

“This transaction is about growth, it positions our operations for success and brings benefits for all Celesio stakeholders,” said Marion Helmes, speaker of Celesio’s management board and its chief financial officer.
“This combination allows two market leaders with complementary geographic footprints to work together in an increasingly global market segment.”

The deal is subject to regulatory approval and McKesson acquiring at least 75 percent of Celesio’s shares. McKesson expects to assume operational control of Celesio during its fiscal year 2015, which begins in April.

The transaction will be funded by cash and a bridge financing facility, McKesson said.