) surged 3.16% on Oct 8, 2013, after reports from agencies like
Reuters and Wall Street Journal suggested that McKesson is in
advanced talks to acquire Germany-based drug distribution company
Celesio for approximately $5 billion.
McKesson is one of the largest healthcare services company in
the U.S. The company delivers pharmaceuticals, medical supplies
and health care information technologies to the healthcare
On the other hand, Celesio provides logistics and services in
the pharmaceutical and healthcare sector with operations in
approximately 14 countries. Celesio generated revenues of more
than €22 billion in 2012. The company serves over 2 million
customers and supplies to over 65,000 pharmacies. Franz Haniel
& Cie GmBH owned approximately 50.0% of total shares
outstanding at the end of 2012.
Another Acquisition for McKesson…..
The potential acquisition, if it goes through, will allow
McKesson to gain a foothold In Europe, thereby geographically
expanding its core operations further.
McKesson has been actively pursuing deals and acquisitions to
drive growth. We remind investors that McKesson acquired PSS
World Medical in Feb 2013 for $1.9 billion. The acquisition has
significantly bolstered McKesson's Medical Surgical Distribution
In Dec 2010, McKesson acquired US Oncology Holdings for
approximately $2.1 billion, thus expanded its existing specialty
pharmaceutical distribution business.
Additionally, McKesson undertook a number of strategic actions
earlier in 2013 to combat the challenges that it expects to face
in the coming quarters and focus better on its core competencies
of drug distribution. Consequently, McKesson decided to exit to
minority investment in Nadro, a privately held pharmaceutical
distributor in Mexico, where the company has a 49% stake.
McKesson has also decided to realign its structure in the
Technology Solutions segment and sell its International
Technology and Hospital Automation business.
Meanwhile, most leading players in the pharmaceutical
distribution business are scurrying to enter into strategic deals
to augment their business further given the current slowdown in
We note that rival
) entered into a strategic agreement with
) and Alliance Boots GmbH earlier in 2013. The agreement includes
a ten-year pharmaceutical distribution contract with Walgreen and
access to generic drugs and related pharmaceutical products
through the Walgreens Boots Alliance Development joint venture.
In return, both Walgreens and Alliance Boots have been granted
rights to jointly purchase a minority equity position in
Earlier, in 2012, Walgreens acquired a 45% stake in
international pharmacy-led health and beauty group Alliance Boots
GmbH for approximately $6.7 billion.
We believe the acquisition, if it goes through, will
definitely boost McKesson's business given Celesio's extensive
network. However, given the size and stature of the potential
acquisition, integration of operations and systems will be a
daunting challenge for McKesson.
We expect investor focus to remain on updates from the company
on the potential deal.
McKesson currently carries a Zacks Rank #2 (Buy). Right now,
) looks more attractive with a Zacks Rank #1 (Strong Buy).
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