McKesson in advanced talks to buy German drugs distributor Celesio for $5.08 bn

US health-care-services company McKesson Corp is in advanced talks to buy German drugs distributor Celesio for more than €3.74 billion ($5.08 billion), The Wall Street Journal today reported, citing people familiar with the matter as saying.

Celesio's majority shareholder, the Franz Haniel & Cie GmbH holding company, has agreed to the deal, but McKesson is trying to hammer out issues like exact price and financing arrangements, the report said.

Should McKesson decide to make a bid, it could offer a premium of up to around 30 per cent, at nearly €22 per share, or €3.74 billion, the report said.

Founded in 1835 as a chemist and dye business, Celesio is one of the largest pharmaceutical wholesalers in Europe and operates several pharmacy chains within Europe.

With 132 wholesale branches, it supplies 65,000 pharmacies and hospitals every day with up to 130,000 pharmaceutical products. Its services benefit a patient pool of about 15 million per day.

With 38,000 employees, the Stuttgart-based company operates in 14 countries, serves over 2 million customers at 2,200 pharmacies and generated revenue of €22.3 billion in 2012.

The Haniel family holds a 50.01-per cent stake in the company through their holding company Bu Franz Haniel & Cie. They also hold 19 per cent of giant German retailer Metro AG.

The Wall Street Journal said that a completed deal would boost McKesson's purchasing power in negotiations with global drug makers, similar to when US pharmacy chain Walgreen Co. acquired a 45-per cent stake in UK drug wholesaler Alliance Boots for $6.7 billion. (See: Walgreen to acquire 45 % in Alliance Boots for $6.7 billion)

The Walgreen-Alliance Boots deal created one of the world's largest drug store and pharmacy retailers with more than 11,000 stores in 12 countries, 365,000 employees worldwide, revenue of around $110 billion, market leader in Europe and the US, and the world's largest pharmacy wholesale and distribution network.

San Francisco-based McKesson has recently gone on an acquisition spree and its latest purchase was carried out in October 2012 when it acquired PSS World Medical Inc for approximately $2.1 billion.

McKesson provides vital medicines and supplies, and information technology solutions that enable the healthcare industry to provide patients better and safer care.

It operates in two primary business categories: distribution solutions and healthcare technology solutions.

The company is the largest pharmaceutical distributor in North America with about one-third market share. It supplies to over 40,000 US pharmacies from Wal-Mart to community pharmacies and hospitals. McKesson is also one of the leading medical supply companies and distributes medical-surgical supplies and homecare supplies.

The company's healthcare technology solutions provides software and hardware eliminating the need for paper prescriptions and paper medical records.