) recently announced that it has received a notification of early
termination of the waiting period under the Hart-Scott Rodino
Antitrust Improvements Act of 1976, in relation with its proposed
PSS World Medical Inc.
On October 25, 2012, McKesson had announced the signing of a
definitive agreement with PSS World Medical Inc., whereby the
former will acquire all outstanding shares of PSS World Medical
for $29.00 per share in cash.
The termination of this waiting period brings McKesson a step
closer to completing its acquisition of PSS World Medical.
Including PSS World Medical's debt of about $480 million and
related transaction costs, the acquisition was valued at
approximately $2.1 billion. Once the acquisition goes through,
PSS World Medical will combine with McKesson's Medical Surgical
McKesson's Medical Surgical Distribution business provides
medical-surgical supply distribution, equipment, logistics and
other services to healthcare providers including physicians'
offices, surgery centers, extended care facilities, homecare and
occupational health sites through a network of 28 distribution
centerswithin the U.S.
The addition of PSS World Medical to the company's product
line will amalgamate distribution capabilities along with product
and technology expertise of both the businesses, thereby
bolstering the Medical Surgical Distribution business of
McKesson, which accounted for a meagre 3% of total sales in
At the time of announcing the acquisition, McKesson had said
that it expects to generate more than $100 million in annual
savings (pre-tax) by the fourth year after the closure of the
deal. On the second quarter 2013 conference call, the company
stated that the deal is expected to add 15 to 25 cents per share
to the company's bottom line after a year of closing.
We note that McKesson has been quite active on the acquisition
front to boost its organic growth. Last month, the company inked
a deal with Emendo Ltd. to acquire the latter. Emendo has
developed CapPlan, which is utilized in more than 40 hospitals
across New Zealand, Australia, Canada and the UK to optimize
operational efficiency by forecasting patient demand and plan
We currently have a Neutral recommendation on McKesson. Our
recommendation is supported by a Zacks #3 Rank (Hold) in the
MCKESSON CORP (MCK): Free Stock Analysis
PSS WORLD MED (PSSI): Free Stock Analysis
To read this article on Zacks.com click here.