STUTTGART, Germany — A German court has given the green light to McKesson Corp. and Celesio AG to operate as an integrated company.
The Stuttgart Higher Regional Court’s approval of the registration of the domination and profit and loss transfer agreement between the companies marks a milestone in McKesson’s acquisition of Celesio, first announced in October 2013.
The court action allows for the creation of “a global leader in pharmaceutical purchasing and distribution,” said McKesson chairman and chief executive officer John Hammergren. With the court-authorized registration, “we will bring together the strengths and expertise of our collective organizations to address the opportunities and needs facing our customers and business partners around the world.”
“As the needs of the health care industry continue to evolve, broader global reach, channel influence and greater purchasing scale are increasingly important,” he added. “With complementary geographic footprints, shared values and industry expertise across multiple markets, we will now serve our customers as one of the largest pharmaceutical wholesalers and providers of logistics and health care services in the world. Together, we will continue to create value in the supply chain and value for our shareholders.”
The combined group has estimated annual revenue of over $170 billion, approximately 85,000 employees and operations in more than 20 countries.
“Upon registration, we will begin working together to provide the most advanced delivery of health care products and services to customers and partners around the world,” said McKesson executive vice president and group president Paul Julian. “Our customers will benefit from increased supply chain efficiency, enhanced global sourcing, and a broad array of innovative product, technology and business solutions. We remain committed to supporting Celesio and its business leaders as they implement their strategy for growth, and we are delighted to achieve this important milestone which allows our organizations to more closely align in the areas where we can deliver further value for our customers and manufacturing partners.”
McKesson and Celesio serve approximately 120,000 pharmacies and hospitals daily in the United States, Canada, Europe and Brazil, including more than 12,000 prescription counters either owned or are part of a strategic banner or franchise network of community pharmacies.
Celesio’s operations will continue to be led by its management board, with Marc Owen as chairman, overseen by the company’s supervisory board. The operations will become part of McKesson’s Distribution Solutions segment led by Julian. Upon registration of the domination and profit and loss transfer agreement, a newly formed Global Procurement team will lead the combined McKesson and Celesio strategy with manufacturing partners.
“The corporate cultures of both McKesson and Celesio are based on integrity, accountability, respect and excellence, with a commitment to always putting customers first,” said Owen. “Both organizations have built strong customer relationships and have a deep understanding of their markets. Completing this important milestone enables us to align our organizations more closely in our common goal of creating additional value for our customers and manufacturing partners. And our employees will benefit from being part of an even stronger international company with tremendous leadership and growth opportunities.”
By the fourth year following the registration of the agreement, McKesson expects to realize annual synergies between $275 million and $325 million.
McKesson owns about 76% of the outstanding shares of Celesio and will continue to consolidate the latter’s financial results.