McKesson Fails To Reach 75% Tender Completion Threshold To Acquire Celesio

(RTTNews) - US drug distributor McKesson Corp. (MCK) announced Monday that it was unsuccessful in reaching the 75 percent completion condition in its voluntary public tender offer for the outstanding shares and convertible bonds of German drug distributor Celesio AG (CAKFF).

"While we are disappointed that we were not successful in completing our offers for Celesio, we have a track record of great performance, a strong balance sheet and demonstrated leadership and scale across our markets," McKesson Chairman and CEO John Hammergren said in a statement.

The company launched the voluntary public takeover offer for the outstanding shares of Celesio on December 5, and the acceptance period for the tender offer ended on January 9.

"We are well positioned and will continue to explore and evaluate opportunities to further strengthen our businesses through our disciplined approach to capital allocation," Hammergren added.

San Francisco-based McKesson, a Fortune 500 company, agreed to acquire Celesio in late October in a deal valued at about $8.3 billion, including debt. The deal would help boost McKesson's share of the generic drug market globally.

McKesson agreed to buy a majority stake of 50.01 percent in Celesio for 23 euros per share from its majority shareholder Franz Haniel & Cie. GmbH, and then launched parallel voluntary public tender offers for the remaining publicly-traded shares and outstanding convertible bonds of Celesio.

On January 9, McKesson agreed with Franz Haniel to sweeten the offer by $0.50 per share and also increased the voluntary public takeover offer to $23.50 per share.

McKesson also reached an agreement with activist investor Elliott Management Corp. to acquire their Celesio convertible bonds for a similar price increase.

The combined company was seen as one of the largest pharmaceutical wholesalers and providers of logistics and services in the healthcare sector, with annual revenues in excess of $150 billion, 81,500 employees and operations in more than 20 countries.

Other U.S. drug distributors such as Cardinal Health Inc. (CAH) and CVS Caremark Corp. (CVS) have also engaged in talks with Celesio, but these talks have focused on strategic cooperation.

McKesson's talks with Celesio come after U.S. drugstore chain operator Walgreen Co. (WAG) acquired a 45 percent stake in European drug wholesaler Alliance Boots GmbH for $6.7 billion in 2012, with an option to buy the remaining stake later.

Stuttgart, Germany-based Celesio is a wholesale and retail company and provides logistics and services to the pharmaceutical and healthcare sectors. It supplies 65,000 pharmacies and hospitals each day with up to 130,000 pharmaceutical products. The company, one of Europe's three largest pharmaceutical wholesale distributors, employs 38,000 people and operates in 14 countries.

MCK closed Monday's regular trading session at $167.14, down $8.30 or 4.73% on a volume of 6.22 million shares.

On Frankfurt's Xetra, Celesio shares closed trading at 24.17 euros, down 0.13 euros or 0.54% on a volume of 0.56 million shares.