AmerisourceBergen to buy
PharMEDium for $2.58 billion
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[October 07, 2015]
(Reuters) - Drug distributor
AmerisourceBergen Corp agreed to buy PharMEDium Healthcare Holdings Inc
for $2.58 billion from private equity firm Clayton, Dubilier & Rice,
expanding its business of supplying compounded drugs to hospitals.
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Compounding is a process in which pharma products are diluted to
create doses that are not sold commercially.
Increased regulatory oversight following a fungal meningitis
outbreak at a compounding pharmacy in 2012 has escalated the costs
for hospitals to produce compounded products internally, boosting
demand for large-scale firms such as PharMEDium.
"PharMEDium brings ABC a complementary service line that is
undergoing a growth renaissance as hospitals more aggressively
outsource compounded sterile needs in wake of new government
regulations," Baird Equity Research analyst Eric Coldwell wrote in a
note.
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Lake Forest, Illinois-based PharMEDium provides compounded
intravenous and local anesthesia products to about 3,000 hospitals
in the United States.
Clayton, Dubilier & Rice acquired PharMEDium in January 2014. While
no financial terms were disclosed, media reports said the deal was
done at around a $900 million enterprise valuation.
PharMEDium filed for a $100 million IPO in August, planning to list
on the New York Stock Exchange.
AmerisourceBergen has been focusing on M&As to expand its product
offerings. In January, the company bought MWI Veterinary for $2.5
billion to expand into animal health.
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The PharMEDium acquisition is expected to add 22-26 cents to
AmerisourceBergen's adjusted earnings per share in 2016 and generate
savings of about $30 million by 2018, the company said on Tuesday.
Morgan Stanley is the financial adviser to AmerisourceBergen, while
J.P. Morgan Securities LLC and Credit Suisse advised PharMEDium.
AmerisourceBergen's shares closed down 2 percent at $93.03 on the
New York Stock Exchange on Tuesday.
(Reporting by Amrutha Penumudi in Bengaluru; Editing by Sriraj
Kalluvila)
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