McKesson acquires PSS World Medical

SAN FRANCISCO—McKesson Corporation has announced the signingof a definitive agreement with PSS World Medical, Inc. under which McKessonwill acquire all of PSS World Medical's outstanding shares for $29 per share incash, for an aggregate total of approximately $2.1 billion. The resultingcompany will be a leading provider of medical supplies, services and technologyfor physicians and extended care customers.

The transaction includes the assumption of PSS WorldMedical's outstanding debt, and has been approved by the boards of directors ofboth companies. The acquisition is subject to customary closing conditions,including approval by PSS World Medical's shareholders. By the fourth yearafter the transaction is finalized, McKesson is expecting to see annual pre-taxsynergies of more than $100 million.

"PSS World Medical and McKesson are both highlycustomer-focused companies with a shared commitment to strengthening theclinical success and financial health of caregivers by solving their mostimportant problems," Gary A. Corless, president and CEO of PSS World Medical,said in a press release. "This transaction positions the combined business toadvance this shared mission and enhance the value we deliver to physicians andextended care customers. This combination creates opportunities for our teammembers and greater value for the shareholders of both organizations."

McKesson's focus is in healthcare services and informationtechnology, and partners with a range of organizations to improve patient care.PSS World Medical markets and distributes medical products and services tofront-line care providers across the United States, and has a team of 4,000employees. The company's main areas of interest for fostering growth arephysician, laboratory, dispensing and home care and hospice.

"The combination of McKesson's Medical Surgical business andPSS World Medical is an exciting next step in McKesson's commitment to improvebusiness health and clinical performance across healthcare," John H.Hammergren, chairman and CEO of McKesson Corporation, said in a statementregarding the deal. "The unified organization will bring extensive distributioncapabilities, deep product and technology expertise and a broad portfolio ofbusiness services to an expanding industry, helping our customers improveefficiency and productivity and deliver better care."

Once the transaction is complete, the combined business willexist as part of McKesson's Distribution Solutions segment, and will report toPaul Julian, executive vice president and group president of McKesson Corp.According to Hammergren, Stanton McComb will become president of the combinedbusiness, with Corless stepping in as chief operating officer of the combinedbusiness. McComb is a "10-year veteran of McKesson and has held various seniorleadership roles in the company, including serving as the president ofMcKesson's Medical Surgical business since March 2011."

"We are extremely excited to bring these two greatorganizations together under two very talented leaders … These two executiveshave outstanding track records of delivering results and building highlymotivated teams, and we are excited about the opportunity to bring together thevery best of these two organizations," said Hammergren.

SOURCE: McKesson press release