Shares of McKesson Corporation (MCK - Analyst Report) were up 3.15% in after hours trading after it reached an agreement with Franz Haniel & Cie. GmbH, the leading shareholder of Celesio.
As per the agreement, McKesson will acquire the entire stake of Franz Haniel & Cie. GmbH in Celesio for €23.50 per share.
Separately, McKesson announced the acquisition of convertible bonds of Celesio from Elliott. The transaction is expected to close within 10 business days.
The agreements with Haniel and Elliott will enable McKesson to obtain the minimum requisite of a 75% stake in Celesio.
We remind investors that last week McKesson announced that it has failed to obtain the mandatory 75% stake for the successful completion of the previously announced acquisition of Germany-based Celesio.
McKesson launched a public takeover offer for the outstanding shares of Celesio in Dec 2013. Last week, McKesson upped its offer to €23.50 per share from €23.00 per share for a 50.01% stake in Celesio.
The increase in the offer price was expected as it was 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 was the final offer from McKesson.
McKesson expects the acquisition to be accretive to the bottom line in the range of $1.00 to $1.20 in the first twelve months following the closure of the transactions leading to 100% ownership in Celesio. By the fourth year, McKesson expects to realize annual synergies between $275 million and $325 million.
Meanwhile, McKesson plans to launch a voluntary tender offer to the remaining minority holders of Celesio common shares. This offer will be launched after the close of the transactions mentioned above.
The news of the agreement after a failed tender bid is encouraging. Celesio provides logistics and services in the pharmaceutical and healthcare sector with operations in approximately 14 countries. The acquisition will enable McKesson to gain a solid foothold in Europe, thereby geographically expanding its core operations further.
McKesson currently carries a Zacks Rank #3 (Hold). Stocks that currently look attractive include Cardinal Health (CAH - Analyst Report), Align Technology Inc. (ALGN - Analyst Report) and Herbalife Ltd. (HLF - Snapshot Report). All three carry a Zacks Rank #1 (Strong Buy).