Back to top

Analyst Blog

In a desperate attempt to acquire Celesio, McKesson Corporation (MCK - Analyst Report) upped its offer to €23.50 per share from €23.00 per share for a 50.01% stake.

The increase in offer price was expected as it was recently reported that hedge fund, Elliot Associates, which holds approximately 25% of shares in Celesio indicated that the offer price of €23 per share grossly undervalues Celesio's worth.

The offer price of €23.50 is the final offer from McKesson.

We remind investors that McKesson announced in Oct 2013 that 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. Elliot Associates were reportedly opposing the acquisition thereafter.

Meanwhile, McKesson also announced that it has increased the consideration offered for the outstanding convertible bonds of Celesio to a price which equates to a look-through price of €23.50 per underlying Celesio share.

McKesson has also reached an agreement with Elliot Associates to acquire their share of convertible bonds in Celesio.

We note that 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 strong foothold in Europe, thereby geographically expanding its core operations further.

The acquisition is conditional upon regulatory approvals along with McKesson obtaining a 75% stake in Celesio.

Shares of McKesson were up 3.25% in regular trading on the news of increased offer price. We expect investor focus to remain on further updates on the Celesio acquisition. 

McKesson currently carries a Zacks Rank #2 (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 Align Technology carry a Zacks Rank #1 (Strong Buy), Herbalife holds a Zacks Rank #2 (Buy).

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