Pharmaceutical distribution company, AmerisourceBergen Corporation (ABC) announced that it will acquire MWI Veterinary Supply, Inc. (MWIV), a leading animal health distribution company in the U.S, for $190 per share or approximately $2.5 billion.
The acquisition price of $190 per share represents an approximate 17.4% premium to the volume weighted average closing price of MWI’s common stock over the three-month period ended Jan 9, 2015.
Both the companies expect to close the transaction by the March quarter of 2015.
Other Details of the Offer
The MWI Veterinary Supply acquisition is expected to boost AmerisourceBergen’s bottom line by approximately 8 cents (on an adjusted basis) in fiscal 2015 and generate about $50 million in synergies by the end of the third full year.
As per the terms of the merger agreement, AmerisourceBergen will commence a tender offer by Jan 26, 2015 to acquire all outstanding shares of MWI Veterinary Supply common stock.
Extension of AmerisourceBergen’s pharmaceutical distribution & services businesses
MWI Veterinary Supply sells pharmaceuticals, vaccines, parasiticides, diagnostics, capital equipment, supplies, pet food and nutritional products. Given MWI Veterinary Supply’s leading positions in both the companion and production markets in the U.S. and the UK, this acquisition will extend AmerisourceBergen’s capabilities into the growing animal health market in the U.S.
Our Take
AmerisourceBergen has been actively pursuing acquisitions and signing deals to strengthen its core areas. We believe the acquisition will diversify the company’s existing pharmaceutical distribution & services businesses into the attractive animal health market, which holds a huge potential at the moment.
We remind investors that AmerisourceBergen had entered into a strategic agreement with Walgreen Boots Alliance (WBA) in fiscal 2013. The agreement includes a 10-year pharmaceutical distribution contract with Walgreen and an access to generic drugs and related pharmaceutical products.
AmerisourceBergen currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the health care sector include Cardinal Health (CAH) and McKesson Corp. (MCK). Both carry a Zacks Rank #2 (Buy).
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