AmerisourceBergen to acquire MWI Veterinary Supply for $2.5 bn

US pharmaceutical distributor AmerisourceBergen Corp is buying leading animal health distribution company MWI Veterinary Supply for approximately $2.5 billion in an all-cash deal aiming to expand into the growing animal health market.

Boise, Idaho-based MWI is a leading distributor of animal health products in the US and the UK. MWI sells more than 50,000 products which include pharmaceuticals, vaccines, parasiticides, diagnostics, capital equipment, supplies, veterinary pet food and nutritional products.

Under the terms of the deal, AmerisourceBergen will offer $190 per share for all of the outstanding shares of MWI, representing a valuation of $2.5 billion, the companies said in a statement.

The deal value includes MWI's $76 million debt.

The offer price represents a 17-per cent premium to the volume weighted average closing price of MWI stock over the three-month period ended 9 January 2015, the last trading day prior to the announcement.

Further to the news, shares in MWI surged over 8 per cent to $190, while AmerisourceBergen stock, which had already jumped 30 per cent in the past one year, was down 2 per cent at $90.93 yesterday in New York.

Valley Forge, Pennsylvania-based AmerisourceBergen is one of the largest global pharmaceutical sourcing and distribution services companies. It distributes prescription drugs and also provides pharmaceutical consulting. The company's annual revenue is around $120 billion and it has approximately 14,000 employees.

''Steven Collis, AmerisourceBergen president and chief executive officer. ''Animal health is a growing market in the US and internationally, and is a logical extension of our pharmaceutical distribution and services businesses.''

Combining AmerisourceBergen's business knowledge and global reach and MWI's expertise, the companies are geared to launch the next generation of superior animal health products and services together, Collis said.

''This transaction represents a terrific opportunity for MWI and our stakeholders. Our team has done an outstanding job creating value for MWI stockholders, and we look forward to continuing our success as part of AmerisourceBergen,'' MWI president and chief executive officer Jim Cleary commented.

The deal, approved by the board of MWI, is expected to close during the March quarter of 2015 subject to regulatory approvals and customary closing conditions.

AmerisourceBergen intends to fund the deal through a combination of cash and long-term debt.

The company will commence a tender offer no later than 26 January 2015 to acquire all of the outstanding shares of MWI

The offer is conditional on MWI's stockholders tendering at least a majority of outstanding shares in the tender offer.

The acquisition of MWI is expected to contribute approximately 8 cents to AmerisourceBergen's 2015 results and generate approximately $50 million in synergies by the end of the third full year, the statement said.

Animal health has become a growing market attracting considerable interest from pharmaceutical companies in recent times.

In November, US activist investor William Ackman bought a 2-billion stake in animal health company Zoetis Inc, while drug major Eli Lilly & Co agreed in April to buy Novartis AG's animal health unit for $5.4 billion.

BofA Merrill Lynch acted as financial advisor, to AmerisourceBergen. J.P. Morgan acted as financial advisor, to MWI.