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US giant McKesson snaps up Lloydspharmacy parent company for £5bn

Business The US healthcare giant's chief executive John Hammergren says community pharmacies will benefit from "increased scale, supply chain expertise and sourcing capabilities" as a result of the deal with Celesio

US healthcare giant McKesson has struck a £5.1 billion ($8.3bn) deal to buy Lloydspharmacy and AAH parent company Celesio by 2014.


The deal with McKesson, a specialist in wholesaling and healthcare technology, will make the combined company one of the largest pharmaceutical wholesalers and healthcare service providers in the world, Celesio said in an announcement today (October 24).


The joint company will have a stake in more than 11,000 pharmacies and make daily deliveries to 120,000 pharmacies and hospitals across 20 countries – putting it on par with the Boots-Walgreens partnership.


McKesson said community pharmacies would benefit from "increased scale, supply chain expertise and sourcing capabilities" as a result of the deal

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Community pharmacies would benefit from "increased scale, supply chain expertise and sourcing capabilities" as a result of the deal, said McKesson chairman and chief executive John Hammergren.


McKesson will buy 50.1 per cent of Celesio's shares upfront, with plans to buy the remaining publically owned shares by March 2014. Celesio will become part of McKesson's distribution solutions division in 2015, but both companies will maintain their own brands and "continue to support customers through existing channels", the companies said.


Together, they will have more than 80,000 employees and predicted annual revenues of more than £92.6bn ($150bn). The companies expect to make annual savings of between £170 million ($275m) and £201m ($325m) in the fourth year of the deal.


"The combination of McKesson and Celesio will create a leading global healthcare services platform that will advance our customers' ability to deliver better, more efficient healthcare solutions," said Mr Hammergren.


McKesson was ranked the 14th highest-grossing US company by Fortune magazine this year. The company reported a 0.2 per cent decline in revenue for the 2012-13 financial year, but still made a net income of £800m ($1.3bn) after tax.


Last year, Celesio reported a 4.5 per cent rise in year-on-year profits to £490.9m.


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How will the McKesson deal affect the UK pharmacy sector?

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