McKesson pushes for global reach with $8.3bn Celesio deal
Rumours regarding the purchase of German logistics firm Celesio have been floating around for a while and last week the acquisition was confirmed with drugs wholesale group McKesson shilling out $8.3bn (€6m) for the firm.
“McKesson and Celesio will unite to form a global leader in healthcare services,” McKesson CEO John Hammergren told stakeholders in a conference call Thursday, bringing together two firms with “complementary geographic footprints, shared values and a history as a trusted partner to customers dating back approximately 180 years.”
He continued: “In response to some of the larger forces for change in healthcare, the industry has evolved rapidly, marked by convergence between segments and increased globalization.”
Therefore, he added, this deal will allow the firms to be well positioned to “meet the increasing global nature of the pharmaceutical supply chain.”
McKesson follows the lead of rival drug distributor, AmerisourceBergen, who has been increasingly looking towards global markets with the acquisition of World Courier last year for $520m, and the inking of a ten year distribution deal with Wallgreens and Alliance Boots in Europe.
“The world is more rapidly globalizing and consolidating, and clearly, McKesson needs to continue to have a leadership role around the world,” Hammergren said.
“We do think there's an opportunity for us to continue to deploy capital in Europe and in Latin America as an example. We think the expertise of Celesio brings in these markets will be extremely helpful to us as we deploy that capital.”
The two companies will maintain their own brands and produce combined revenues of over $150bn, with a network of 81,500 employees across more than twenty countries, the firm has said.
Strong Buy
The completion of the “long-awaited acquisition” on top of strong Q2 saw ISI Group analyst Ross Muken upgrade McKesson’s rating from “Buy to Strong Buy.”
He said: “We contend that the Celesio transaction provides meaningful multi-year earnings per share visibility to a business already experiencing strong core trends.
“When combined with one of healthcare's top management teams (stellar track record, particularly M&A), we see MCK as a must-own large cap stock.”
For the quarter, Mckesson reported revenues of $33bn, up 11% year-on-year, with net income rising slightly to $404m.
