LONDON â€" The McKesson Corporation said on Monday that it had failed to receive the minimum shareholder support needed for its $8.3 billion acquisition of the German pharmaceutical wholesaler Celesio, despite a sweetened tender offer last week.
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. But the transaction called for at least 75 percent of the company’s outstanding shares and convertible bonds to be tendered.
Last week, McKesson increased its tender offer for Celesio at the last minute after weeks of vocal criticism of the offer by Elliott Management, a hedge fund in New York founded by Paul Singer.
The hedge fund, which has an economic interest of more than 25 percent in Celesio, announced on Thursday that it had accepted the McKesson’s “best and final†offer and would tender its shares. The deadline to tender shares was midnight on Thursday.
“While we are disappointed that we were not successful in completing our offers for Celesio, we have a track record of great performance, a strong balance sheet and demonstrated leadership and scale across our markets,†said John H. Hammergren, McKesson’s chairman and chief executive. “We are well positioned and will continue to explore and evaluate opportunities to further strengthen our businesses through our disciplined approach to capital allocation.â€
McKesson didn’t say on Monday whether it would continue with its bid to acquire Celesio.
The McKesson-Celesio deal would have created 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 have operated 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.
The deal would have been subject to regulatory approval by German financial authorities, as well as competition regulators in three countries: Austria, Ireland and Slovenia.
Elliott, the activist fund, engaged in a game of brinkmanship, insisting repeatedly that McKesson could afford to pay a “fairer†price to shareholders and bondholders and still end up with a deal that would greatly increase earnings per share as early as the first year of operations for the combined company.
The hedge fund insisted as recently as Dec. 23 that it wouldn’t tender its shares, but changed its tune on Thursday when McKesson increased its offer to 23.50 euros, or about $32.08, a share. Its original offer was 23 euros, or $31.76, a share,
Shares of McKesson were down 6.8 percent to 168.64 in trading in New York on Monday afternoon.
