Elliott Management said on Thursday that it would participate in a sweetened tender offer by the McKesson Corporation for the German pharmaceutical wholesaler Celesio, ending an impasse that threatened to block the $8.3 billion deal.
Elliott, a hedge fund company based in New York and founded by Paul Singer, had been vocal in its criticism of the tender offer originally announced in October, saying it “substantially†undervalued Celesio. The hedge fund, which has an economic interest of more than 25 percent in Celesio, said as recently as Dec. 23 that it would not participate unless the offer was increased.
In October, McKesson, a health care services company based in San Francisco, announced that it had acquired a controlling stake in Celesio from Franz Haniel & Cie., the majority shareholder, and planned to start a tender offer for the remaining shares.
On Thursday, Elliott said two of its funds had agreed to accept McKesson’s increased tender offer of 23.50 euros, or about $31.98, a share. Elliott said that its funds had agreed to sell convertible bonds and shares held in Celesio.
McKesson said on Thursday that the raised bid was its “best and final†offer. The deadline to accept the tender offer is midnight Thursday.
In December, Elliott urged McKesson to sweeten the deal, saying the company could afford to pay a “fairer†price to shareholders and bondholders and still have a deal that would greatly increase earnings per share as early as the first year of operations for the combined company.
The McKesson-Celesio deal would create one of the world’s largest pharmaceutical wholesalers and providers of logistics and services in the health care sector, with annual revenue of more than $150 billion and about 81,500 employees worldwide. The combined company would operate in 20 countries.
Both companies act as distributors that provide prescription and over-the-counter drugs to pharmacy chains, independent pharmacists and institutions like hospitals. Celesio also operates Lloyds, a British pharmacy chain.
Shares of Celesio were down just slightly, at €23.62, in Thursday morning trading in Frankfurt.
