By Melodie Warner
McKesson Corp. (MCK) agreed to acquire PSS World Medical Inc.
(PSSI) for roughly $1.46 billion in cash as the medical-products
distributor looks to broaden its products and services.
McKesson said it will pay $29 per PSS World share, a 34% premium
to the medical-products supplier's Wednesday close. Shares were
trading 33% higher at $28.73 premarket. The stock has fallen 11% so
far this year.
Including the assumption of PSS World's debt, the deal is worth
$2.1 billion.
PSS unveiled plans in May to sell its businesses that serve
skilled nursing facilities and specialty dental practices, citing a
rapidly changing health-care environment that has challenged its
results for the past year.
Meanwhile, McKesson has seen increased revenue for over a year
on the strong performance of its U.S. pharmaceutical distribution
business. As an increasing number of blockbuster drugs lose market
exclusivity, the company has also benefited from introductions of
generic versions, which typically carry higher margins than
higher-priced branded drugs.
McKesson said it will combined PSS World with its medical
surgical business and the combined business will be reported as
part of McKesson's distribution solutions segment.
Separately, McKesson reported its fiscal second-quarter earnings
rose 35% as its gross margin improved to 5.8% from 5.5%.
For the quarter ended Sept. 30, McKesson reported a profit of
$401 million, or $1.67 a share, up from $296 million, or $1.18 a
share, a year earlier. Excluding items such as a litigation
reserve, adjusted per-share earnings rose to $1.92 from $1.63.
Revenue declined 1.2% to $29.85 billion.
Analysts polled by Thomson Reuters had most recently forecast
earnings of $1.78 on revenue of $30.91 billion.
The company also raised the low end of its full-year adjusted
earnings estimate by 10 cents, now expecting $7.15 to $7.35 a
share.
Shares closed Wednesday at $89.51 and were inactive premarket.
The stock is up 15% so far this year.
Write to Melodie Warner at melodie.warner@dowjones.com
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