German Court Approves McKesson, Celesio Deal; To Now Operate As Integrated Firm

(RTTNews) - U.S. drug distributor McKesson Corp. (MCK) announced Tuesday that a German Court has approved the registration of the domination and profit and loss transfer agreement between its unit McKesson Deutschland GmbH & Co. KGaA and German peer Celesio AG (CAKFF.PK). The deal is expected to be formally registered shortly.

The approval of the agreement will allow McKesson and Celesio to operate as an integrated company. McKesson had in October announced its intention to acquire a majority stake in Celesio, and ended up currently owning about 76 percent of the outstanding shares of Celesio.

"Today's announcement is an important milestone and clears the path for our companies to operate in an integrated way, creating a global leader in pharmaceutical purchasing and distribution. With the registration of the domination and profit and loss transfer agreement, 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," McKesson Chairman and CEO John Hammergren said in a statement.

The combined group is expected to have annual revenues exceeding $170 billion, around 85,000 employees worldwide, and operations in more than 20 countries.

The combined entity will serve nearly 120,000 pharmacy and hospital locations on a daily basis in the U.S., Canada, Europe and Brazil, including over 12,000 pharmacies that are either owned or are part of a strategic banner or franchise network of community pharmacies.

McKesson said it continues to expect annual synergies of $275 million to $325 million by the fourth year following registration of the domination and profit and loss transfer agreement.

Following the registration, the operations of Celesio will be part of McKesson's Distribution Solutions segment, led by McKesson's Executive Vice President and Group President Paul Julian. Meanwhile, a newly formed Global Procurement team will lead the combined McKesson and Celesio strategy with their manufacturing partners across the globe.

However, Celesio's operations would continue to be led by its management board with Marc Owen as its chairman, overseen by the Celesio Supervisory Board.

McKesson, which currently owns about 76 percent of Celesio's outstanding shares, would continue to consolidate the financial results of Celesio.

McKesson agreed on October 23 to acquire a majority stake of 50.01 percent in Celesio for 23 euros per share from Franz Haniel & Cie. GmbH in a deal valued at 6.1 billion euros or $8.3 billion, including assumption of Celesio's outstanding debt.

McKesson also launched a parallel voluntary public tender offer for the remaining publicly-traded shares and outstanding convertible bonds of Celesio. The closure of the tender offer led to McKesson accumulating 75.7 percent of Celesio shares on a fully diluted basis.

MCK closed Monday's regular trading session at $208.80, down $1.96 or 0.93% on a volume of 0.86 million shares.