McKesson, a North American healthcare services and information technology company, has signed an agreement to acquire a majority stake in Celesio, an international wholesale and retail company and provider of logistics and services to the pharmaceutical and healthcare sectors, for $32 per share and to launch parallel voluntary public tender offers for the remaining publicly-traded shares and outstanding convertible bonds of Celesio. The offer price represents a 39% premium over the three-month volume weighted average price prior to the market speculation that began Oct. 8. The total transaction, including the assumption of Celesio’s outstanding debt, is valued at approximately $8.3 billion.

McKesson and Celesio will combine to form a global healthcare service provider with experience in delivering solutions to pharmacies, manufacturers and patients. The combined company will be one of the largest pharmaceutical wholesalers and providers of logistics and services in the healthcare sector and expects to increase supply chain efficiency and enhanced global sourcing. It also says its global distribution and logistics capabilities will bring new value and services to manufacturing partners and it will offer a broad array of innovative technology and business services.

 “The healthcare industry is evolving rapidly, marked by convergence between segments and increased globalization,” said John H. Hammergren, chairman and CEO, McKesson. “We will bring together the strengths and experience of each company to address global healthcare challenges.”

After the closing, McKesson and Celesio expect to maintain their own brands and continue to support customers through existing channels.

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

The combined group is expected to have annual revenues in excess of $150 billion, approximately 81,500 employees worldwide and operations in more than 20 countries. McKesson and Celesio deliver to approximately 120,000 pharmacy and hospital locations on a daily basis in the U.S., Canada, Europe and Brazil, including more than 11,000 pharmacies that are either owned or are part of a strategic banner or franchise network of community pharmacies. 

McKesson has agreed to acquire Haniel’s stake in Celesio, currently representing 50.01% of the total outstanding shares of the company. The share purchase agreement has been approved by McKesson’s board of directors and Haniel’s supervisory board.

McKesson also has entered into a business combination agreement with Celesio that outlines the key parameters to facilitate the combination of both companies and which has been approved by McKesson’s board of directors and Celesio’s supervisory board. The management board and the supervisory board of Celesio welcome the takeover offer, and the members of the management board intend to accept the takeover offer for any Celesio shares held by them.

McKesson expects the tender offers to commence during McKesson’s fiscal third quarter of 2014, ending Dec. 31, and conclude in McKesson’s fiscal fourth quarter of 2014, but no earlier than Jan. 17, 2014.

The share purchase from Haniel and the tender offers are subject to certain closing conditions, including regulatory approvals and the acquisition by McKesson of a minimum of 75% of the Celesio shares on a fully diluted basis.

Upon the successful completion of the tender offers, McKesson will consolidate the financial results of Celesio, and McKesson’s earnings will reflect its proportionate share of Celesio’s earnings. McKesson expects to complete the tender offers in its fiscal fourth quarter of 2014, ending March 31, 2014, and expects to complete the required steps to obtain operational control of Celesio during McKesson’s fiscal 2015.

By the fourth year following the completion of the required steps to obtain operational control of Celesio, McKesson expects to realize annual synergies between $275 million and $325 million.

McKesson expects to fund a portion of the transaction with cash and has put a bridge financing facility in place to fund the balance of the transaction. The permanent financing structure will be determined by the timing and the number of Celesio shares and convertible bonds tendered in the tender offers. McKesson is committed to maintaining its status as an investment grade-rated company in the final permanent financing structure.