McKesson Scoops Up PSS World Medical for $2.1B

By FOXBusiness

Drug wholesaler McKesson (NYSE:MCK) agreed to buy PSS World Medical (NASDAQ:PSSI) for $1.46 billion in an effort to boost its portfolio of medical supplies and expand its distribution.

The deal calls for McKesson to pay $29 a share in cash, a 34% premium to PSS World Medical’s closing stock price on Wednesday, and acquire outstanding debt, which brings the transaction’s value up to $2.1 billion.

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PSS posted sales of $2.1 billion last year.

San Francisco-based McKesson, which supplies medicines to pharmacies like CVS Caremark (NYSE:CVS) and Rite Aid (NYSE:RAD), expects to realize annual synergies or more than $100 million by the fourth year after the deal closes.

“The combination of McKesson’s Medical Surgical business and PSS World Medical is an exciting next step in McKesson’s commitment to improve business health and clinical performance across healthcare,” McKesson CEO John Hammergren said in a statement.

McKesson, which reported cash and cash equivalents of about $2.83 billion in its latest quarter ended Sept. 30, posted a 35% increase in net income and topped Wall Street expectations.

Revenue slumped by 1% to $29.9 billion.

Shares of McKesson soared about 4% to $93.09 in recent trade, while those of PSS soared about 33% to a 52-week high of $28.75.