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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
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 initially 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 expanded our
global geographic area. Financial results for Celesio are included within our International pharmaceutical
distribution and services business, which is part of our Distribution Solutions segment, since the date of
Acquisition.
From February 7, 2014 through March 31, 2014, substantially all of the convertible bonds issued by Celesio
(held by both third parties and us) were converted into an additional 20.9 million common shares of Celesio and
approximately $30 million in cash. At March 31, 2014, we owned approximately 75.4% of Celesio’s outstanding
and fully diluted common shares.
The fair value measurements of the assets acquired and liabilities assumed of Celesio as of the acquisition
date were finalized upon completion of the measurement period. The following table summarizes the final
amounts of the fair value recognized for the assets acquired and liabilities assumed as of the acquisition date as
well as adjustments made during the measurement period. Among the adjustments recorded, the fair value of the
acquired intangible assets decreased by $709 million. The fair value was primarily determined by applying the
income approach using unobservable inputs for projected cash flows, which were refined during the
measurement period and are considered Level 3 inputs under the fair value measurements and disclosure
guidance. These refinements did not have a significant impact on our consolidated statements of operations,
balance sheets or cash flows in any period and, therefore, we have not retrospectively adjusted our financial
statements.
(In millions)
Amounts
Previously
Recognized as of
Acquisition Date
(Provisional)
Measurement
Period
Adjustments
Amounts
Recognized as of
Acquisition Date
(Final as
Adjusted)
Receivables $ 3,425 $ (49) $ 3,376
Other current assets, net of cash and cash equivalents acquired 2,413 17 2,430
Goodwill 3,570 655 4,225
Intangible assets 3,018 (709) 2,309
Other long-term assets 1,272 (39) 1,233
Current liabilities (4,096) (28) (4,124)
Short-term borrowings and current portion of long-term debt (1,990) — (1,990)
Long-term debt (322) — (322)
Other long-term liabilities (1,293) 158 (1,135)
Fair value of net assets, less cash and cash equivalents 5,997 5 6,002
Less: Noncontrolling Interests (1,500) (5) (1,505)
Net assets acquired, net of cash and cash equivalents $ 4,497 $ — $ 4,497
76