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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
69
2. Business Combinations
Fiscal 2014
On February 6, 2014, we completed the acquisition of 77.6% of the then outstanding common shares of Celesio AG (“Celesio”)
and certain convertible bonds of Celesio for cash consideration of $4.5 billion, net of cash acquired (the “Acquisition”). Upon
the acquisition, our ownership of Celesio’s fully diluted common shares was 75.6% and, as required, we consolidated Celesio’s
debt with a fair value of $2.3 billion as a liability on our consolidated balance sheet. The Acquisition was funded by utilizing a
senior bridge loan, our existing accounts receivable sales facility and cash on hand. Celesio is an international wholesale and retail
company and a provider of logistics and services to the pharmaceutical and healthcare sectors. Celesio’s headquarters is in Stuttgart,
Germany and it operates in 14 countries around the world. The acquisition of Celesio expands our global geographic area; the
combined company will be one of the largest pharmaceutical wholesalers and providers of logistics and services in the healthcare
sector worldwide.
Our acquisition of Celesio was consummated through a series of transactions:
• 129.3 million of common shares of Celesio were acquired from Franz Haniel & Cie. GmbH (“Haniel”) for cash
consideration of €23.50 per common share or $4,128 million.
• 4,840 of the 7,000 convertible bonds issued by Celesio in the nominal aggregate amount of €350 million due in October
2014 (the “2014 Bonds”), and 2,180 of the 3,500 convertible bonds issued by Celesio in the nominal amount of €350 million
due in April 2018 (the “2018 Bonds”) were acquired from Elliot International, L.P., The Liverpool Limited Partnership
and Elliot Capital Advisers, L.P. (together, the “Elliot Group”) for cash consideration of $951 million. The 2,180 acquired
2018 Bonds were converted to 11.4 million common shares of Celesio.
• 303 of the 2014 Bonds and 216 of the 2018 Bonds were acquired in private transactions for cash consideration of
$63 million. 139 of the acquired 2018 Bonds were converted to 0.7 million common shares of Celesio.
From February 7, 2014 through March 31, 2014, we converted our remaining 2014 Bonds and 2018 Bonds into 11.9 million
of Celesio common shares. Also during this time period, substantially all of the remaining 2014 Bonds and 2018 Bonds held by
third parties were converted to 9 million of Celesio common shares valued at $313 million and approximately $30 million in cash.
At March 31, 2014, we owned approximately 75.4% of Celesio’s outstanding and fully diluted common shares.
In accordance with a business combination agreement that we entered into with Celesio in January 2014, on February 28,
2014 and April 7, 2014 we launched voluntary public tender offers for the common shares of Celesio that remain outstanding for
€23.50 per share. In April 2014, the last of these tender offers expired and we acquired 1 million of additional common shares.
We also intend to enter into a domination and profit and loss transfer agreement, with Celesio as the dominated party, pursuant to
Sections 291 et seq. of the German Stock Corporation Act (Aktiengesetz - AktG). Such a domination and profit and loss transfer
agreement does not require any further regulatory approval.