Back to top

Analyst Blog

As per reports from various news agencies, McKesson Corporation's (MCK - Analyst Report) proposed acquisition of Germany-based drug distribution company Celesio is in jeopardy.

It was recently reported that hedge fund, Elliot International, which holds approximately 25% of shares in Celesio feels the offer price of €23 per share grossly undervalues Celesio's worth. It expects McKesson to increase its offer price in order to gain full operational control.

We remind investors that McKesson announced in Oct 2013 it has signed an agreement with Franz Haniel & Cie. GmbH, the largest shareholder in Celesio, to acquire a majority stake in Celesio for approximately €23 per share or $8.3 billion. Under the terms of a share purchase agreement, McKesson has agreed to acquire Franz Haniel & Cie. GmbH’s stake in Celesio, which currently represents 50.01% of the total outstanding shares of the company.

However, the acquisition is conditional upon regulatory approvals and the acquisition of a 75% stake in Celesio by McKesson.

Last week, McKesson launched a public takeover offer for the outstanding shares of Celesio.

The company also launched tender offers for the outstanding convertible bonds of Celesio at a price corresponding to the value of the underlying shares implied by the offer price of €23 per share.

Celesio provides logistics and services in the pharmaceutical and healthcare sector with operations in approximately 14 countries. We are positive on the Celesio acquisition. The potential acquisition, if it goes through, will allow McKesson to gain a foothold in Europe, thereby geographically expanding its core operations further.

However, with Elliot International offering resistance to the deal, the acquisition might not go through.

We expect investor focus on to remain on further updates on the Celesio acquisition.

McKesson currently carries a Zacks Rank #1 (Strong Buy). Other stocks that currently look attractive include Cardinal Health (CAH - Analyst Report),  Align Technology Inc. (ALGN - Analyst Report) and Herbalife Ltd. (HLF - Snapshot Report). While Cardinal Health and Herbalife carry a Zacks Rank #2 (Buy), Align Technology is a Zacks Rank #1.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ALASKA AIR… ALK 96.79 +2.26%
PILGRIMS PR… PPC 29.50 +1.90%
SASOL LTD -… SSL 58.83 +1.78%
NSK LTD -UN… NPSKY 26.70 +1.52%
CTPARTNERS… CTP 10.99 +1.29%