McKesson to acquire US Oncology for $560M

AP News
Posted: Nov 01, 2010 5:01 PM
McKesson to acquire US Oncology for $560M

Medical supplies distributor McKesson Corp. said Monday it will pay $560 million in cash to acquire US Oncology, a company that provides drugs and services to 500 cancer centers across the U.S.

McKesson said there is already an overlap between the goods and services provided by the two companies, and the combination will allow for cost-savings from shared operations.

"McKesson and US Oncology's businesses are highly complementary, providing our collective customers access to more services and solutions that will enhance their ability to deliver advanced cancer care," Paul Julian, McKesson executive vice president and group president, said in a statement.

McKesson plans to acquire all outstanding shares of US Oncology, which is a privately held company based in The Woodlands, Texas. In addition to what it is paying for the company's shares, McKesson said it will assume $1.6 billion of US Oncology's debt, which will be prepaid or refinanced.

US Oncology provides cancer drugs and administrative services to 1,000 doctors in 38 states. McKesson said the combined company will serve more than 3,000 cancer specialists.

Originally operating as a pharmaceutical distributor, McKesson has increasingly broadened its business to provide billing and health information technology services to hospitals and doctor's offices.

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"The acquisition of US Oncology will fit well with McKesson's overall strategy to extend our presence within our existing lines of business," McKesson CEO and President John Hammergren said on a call with analysts.

The purchase is expected to have no effect on McKesson's earnings this year and add to it starting in fiscal year 2012.

Bruce Broussard, US Oncology's chairman and CEO, will lead McKesson's specialty care solutions business. He will report to Julian.

US Oncology will continue to operate under its brand name.

Shares of McKesson Corp. rose $1.90, or 2.9 percent, to $67.88.