US's McKesson launches bid for Germany's Celesio

BERLIN (AP) — U.S. pharmaceutical distributor McKesson Corp. has launched an $8.3 billion takeover offer for German competitor Celesio AG.

McKesson signed an agreement Thursday with German company Haniel to acquire its 50.01 percent stake in Celesio and is making an offer to other shareholders at 23 euros a share. The offer represents a 5.8 percent premium to Celesio's closing share price on Wednesday.

San Francisco-based McKesson is also assuming Celesio's outstanding debt, lifting the value of the deal up to $8.3 billion. Celesio's management has welcomed the offer. McKesson supplies medicines to half of U.S. hospitals, as well as doctors and health plans. It has more than 37,000 employees and reported revenue of $122.7 billion last year.

Stuttgart-based Celesio has about 38,000 employees, operates in 14 countries, runs 2,200 pharmacies and posted revenue of 22.3 billion euros (about $29.5 billion) in 2012. The two companies plan to maintain their own brands after the deal is completed, McKesson said.

McKesson shares rose $7, or 4.9 percent, to $150.05 in morning trading in the U.S. Earlier the stock reached an all-time high of $155. Celesio shares gained 5.5 percent at 22.91 euros in Frankfurt. Fitch Ratings said it will review McKesson's ratings for a possible downgrade. Fitch has an 'A-' rating on McKesson's credit. That rating is investment grade and four notches above "junk" status.

"The proposed Celesio deal is strategically sound, but its funding is likely to significantly increase McKesson's debt load," Fitch said. The firm said McKesson has a lot of leverage considering its current rating.

McKesson also reported its fiscal second-quarter results on Thursday. The company said its net income rose 1 percent, to $404 million, or $1.74 per share, from $401 million, or $1.67 per share. Excluding one-time charges, McKesson said it earned $2.27 per share. Revenue grew 11 percent, to $32.95 billion from $29.78 billion.

Analysts expected McKesson to report net income of $2.04 per share and $32.14 billion in revenue, according to FactSet. The company's second quarter ended Sept. 30. The company said it now expects adjusted net income of $8.40 to $8.70 per share in fiscal 2014, up from its previous estimate of $8.05 to $8.35 per share.

Analysts had forecast $8.32 per share on average.

Related Headlines

  • Survey points to pick-up in global M&A

    Growing optimism over the global economy is likely to lead to a marked pick-up in the number of mergers and acquisitions over the coming months, a survey of executives found ... 

  • Joe Kaesar, Ralf P. Thomas

    Siemens shares rise on buyback announcement

    German industrial conglomerate Siemens said Thursday its profit dropped in the fourth quarter, but its shares rose after it announced it would buy back 4 billion euros ($5. 

  • BP sees profit drop in Q3 but raises dividend

    U.K. oil company BP reported a 34 percent drop in third-quarter net profit, but said Wednesday it will increase its quarterly dividend and divest another $10 billion in assets 

  • Lufthansa profits slide amid restructuring

    German airline Lufthansa says net profit for the first nine months of the year fell 65 percent, to 247 million euros ($340 million) from 697 million euros in the same period ...