Breakdown

13 January 2014 By Olaf Storbeck

U.S. drug wholesaler McKesson has failed to buy its German peer – despite both sides and most shareholders wanting a deal. The drawn-out process exposed weaknesses at Celesio and in Germany’s M&A rules. Elliott, the hedge fund that tried to play kingmaker, will suffer too.

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McKesson’s 6.2 billion euro offer for Celesio, a European peer, missed its 75 percent completion condition, the U.S. pharmaceutical wholesaler said on Jan. 13. McKesson’s shares dropped by up to 6 percent. McKesson’s offer, increased by 50 cents per share on Jan. 9 to 23.50 euros, represented a 42 percent premium to Celesio’s undisturbed share price.

“While we are disappointed that we were not successful in completing our offers for Celesio, we have a track record of great performance, a strong balance sheet and demonstrated leadership and scale across our markets,” said John Hammergren, McKesson’s chairman and chief executive. “We are well positioned and will continue to explore and evaluate opportunities to further strengthen our businesses through our disciplined approach to capital allocation.”

Celesio’s 50 percent owner Franz Haniel & Cie, which had negotiated the deal with McKesson, said it was carefully weighing all options for Celesio. For the time being, Celesio said it would maintain its “strong and competitive position as an independent company”, with Haniel as its biggest shareholder.

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