Hedge Fund Has No Plans to Participate in Tender Offer for Celesio

LONDON - Elliott Management, the New York-based hedge fund company founded by Paul Singer, reiterated Monday that it had no plans to participate in a tender offer by McKesson Corporation for the German pharmaceutical wholesaler Celesio unless the deal were sweetened.

The hedge fund, which has an economic interest of more than 25 percent in Celesio, said it believed that the current offer “substantially undervalues” Celesio and was not in the best interest of shareholders and bondholders.

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 in a deal valued at $8.3 billion.

“Elliott has seen reports suggesting that it will change its mind and accept McKesson’s offer,” the fund said in a statement on Friday. “These reports are categorically incorrect. To be absolutely clear, Elliott’s final, binding decision is not to accept McKesson’s offer on its current terms.”

Celesio has declined to comment. McKesson did not immediately respond to a request for comment on Monday.

Earlier this month, 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 operation 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.

The deal is expected to help the combined company in terms of purchasing power and a broader worldwide reach. The two companies have limited overlap across the global and would maintain their own brands.

Shares of Celesio were down just slightly to 22.83 euros, or $30.63, on Monday morning in trading in Frankfurt.