McKesson Corp. has raised its offer to purchase Germany-based pharmaceutical distributor Celesio.

McKesson, Celesio, pharmaceutical distributor, acquisition, Franz Haniel & Cie. GmbH, U.S. hedge fund Elliot

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McKesson hikes bid to acquire Celesio

January 9th, 2014

SAN FRANCISCO – McKesson Corp. has raised its offer to purchase Germany-based pharmaceutical distributor Celesio.

Calling the new bid its "best and final offer," McKesson said Thursday that it has reached an agreement with Franz Haniel & Cie. GmbH, currently representing a 50.01% stake in Celesio, to raise the purchase price 23.50 euros ($31.94) per share.

McKesson had offered 23 euros ($31.26) per share when it announced the 6.1 billion euro ($8.3 billion) deal to buy a majority interest in Celesio in late October.

With the higher bid, the price that McKesson is proposing to all shareholders of Celesio, via a voluntary public takeover offer, increased to 23.50 euros per share. McKesson also said it has increased its tender offers for the outstanding convertible bonds of Celesio Finance B.V. to a price equating to a look-through price of 23.50 euros per underlying Celesio share.

Also on Thursday, McKesson announced that it has reached an agreement with U.S. hedge fund Elliot to acquire its Celesio convertible bonds. The closing of the bond purchase from Elliott is subject to the completion of the public takeover offer and the tender offers. The periods to accept the takeover and the tender offers end Jan. 9 at 24:00 Central European Time (6 p.m. Eastern Standard Time).

Under the complex deal announced in October, McKesson entered into a share purchase agreement with Franz Haniel & Cie., Celesio's majority owner, to buy its stake in the company. McKesson also agreed to launch public tender offers for the remaining publicly traded shares and the outstanding convertible bonds of Celesio, as well as assume the company's outstanding debt. The share purchase from Haniel and the tender offers are subject to certain closing conditions, including regulatory approvals and McKesson's acquisition of a minimum of 75% of the diluted shares of Celesio.

In recent weeks, McKesson had been working to end a stand-off over the deal. Last month hedge fund Elliott, which holds over a quarter of Celesio's voting rights, said McKesson's offer was too low and that it wouldn't tender its shares.

If the acquisition moves forward, it would bring together the biggest U.S. drug distributor with one of the world's largest wholesalers and providers of logistics and services to the pharmaceutical and health care sectors. McKession and Celesio said the union would form a global leader in health care services, with deep expertise in delivering solutions to pharmacies, manufacturers, patients and other customers.