By Michelle Fox | November 21, 2017 | Press Releases, Cravath News
VALLEY FORGE, Pa. & SPRINGFIELD, Ill.--(BUSINESS WIRE)--AmerisourceBergen Corporation (NYSE:ABC) and H. D. Smith today announced that the companies have signed a definitive agreement under which AmerisourceBergen will purchase H. D. Smith, the largest independent wholesaler in the U.S., for $815 million in cash. AmerisourceBergen plans to fund the acquisition through the issuance of new long-term debt. The acquisition is expected to be slightly accretive to adjusted diluted earnings per share (EPS) in fiscal year 2018, and to achieve full run-rate synergies and be approximately $0.15 accretive to the Company’s adjusted EPS in fiscal year 20201. This acquisition was not contemplated in the previous guidance the Company provided for fiscal year 2018. Based on the estimated contribution of this acquisition, the Company now expects revenue growth to be in the range of 8 percent to 11 percent, adjusted operating income growth to be in the range of 4 percent to 7 percent and Pharmaceutical Distribution Services segment operating income growth in the range of 4 percent to 7 percent. AmerisourceBergen is reaffirming the rest of its previously announced fiscal 2018 financial guidance. The transaction is subject to regulatory review and other closing conditions and is expected to close in early calendar 2018.
“The acquisition of H. D. Smith – a best-in-class private distributor with facilities across the country and a diversified customer base – strengthens our core business and expands and enhances our strategic scale in U.S. pharmaceutical distribution,” said Steven H. Collis, Chairman, President and Chief Executive Officer of AmerisourceBergen. “This acquisition also builds upon our foundation and meaningfully expands our support for independent community pharmacies. We remain committed to building our business to meet the evolving needs of our customers, driving long-term value for the healthcare system and delivering compelling returns for our shareholders. Importantly, we are united in our responsibility to create healthier futures.”
“H. D. Smith has always shared our passion for supporting its customers – across community pharmacy, health systems, long-term care and specialty distribution,” said Robert P. Mauch, Group President, Pharmaceutical Distribution and Strategic Global Sourcing at AmerisourceBergen. “The established legacy of H. D. Smith in serving community pharmacies is strongly aligned with and complements the services AmerisourceBergen provides through Good Neighbor Pharmacy and Elevate Provider Network. Together, we will continue to offer the differentiated support independent community pharmacies need to thrive in an evolving healthcare marketplace. We welcome the opportunity to provide valuable solutions, along with our industry leading customer experience, to all of these healthcare providers.”
Since 1954, H. D. Smith has built a reputation for excellence and customer-focused healthcare distribution. The company is among the largest national wholesalers and, with 10 distribution centers across the U.S., it provides full-line distribution of brand, generic and specialty drugs, as well as high-value services and solutions for manufacturers and healthcare providers. H. D. Smith customers include retail pharmacies, specialty pharmacies, long-term care facilities, institutional / hospital systems and independent physicians and clinics. H. D. Smith subsidiaries Triplefin, a pharmaceutical brand support provider, and Arete Pharmacy Network, a pharmacy services administrative organization, are not included in this transaction.
“Our ultimate priority and commitment has been, and continues to be, the needs of our customers and trading partners,” said Dale Smith, Chairman and CEO, H. D. Smith Holding Company. “Working toward a common goal, H. D. Smith associates have been committed to providing the best customer experience with a focus on honesty and integrity. We remain proud of our contributions to improve healthcare across the country, and we are honored to have supported the success of community healthcare providers and our manufacturer partners. We believe AmerisourceBergen will continue the strong foundation set by my father. In joining AmerisourceBergen, we are confident our mission will continue, and remain a point of pride for the H. D. Smith family and its enduring legacy.”
Citi acted as financial advisor, and Cravath, Swaine & Moore LLP provided legal advice to AmerisourceBergen. Morgan Stanley acted as financial advisor, and Schiff Hardin LLP provided legal advice to H. D. Smith.
AmerisourceBergen provides pharmaceutical products, value-driving services and business solutions that improve access to care. Tens of thousands of healthcare providers, veterinary practices and livestock producers trust us as their partner in the pharmaceutical supply chain. Global manufacturers depend on us for services that drive commercial success for their products. Through our daily work—and powered by our 20,000 associates—we are united in our responsibility to create healthier futures. AmerisourceBergen is ranked #11 on the Fortune 500, with more than $150 billion in annual revenue. The company is headquartered in Valley Forge, Pa. and has a presence in 50+ countries. Learn more at amerisourcebergen.com.
About H. D. Smith
H. D. Smith is the largest, privately held national wholesaler, with a complete line of healthcare products and solutions to improve patient care. The company creates value and an extraordinary customer experience by impacting the healthcare supply chain. Bridging the gap between manufacturer and patient, H. D. Smith’s specialty solutions division offers a unique suite of strategic programs for patient access on behalf of pharmaceutical suppliers. Headquartered in Springfield, Illinois, H. D. Smith also operates CompleteCare Pharmacy, Smith Medical Partners, Triplefin and Valley Wholesale Drug.