McKesson Corporation (NYSE:MCK) today announced the commencement
of an exchange offer for the split-off of its wholly-owned
subsidiary, PF2 SpinCo, Inc. (“SpinCo”), which will hold all of McKesson’s
interest in Change Healthcare LLC (“Change Healthcare”), as part of
McKesson’s previously announced agreement with Change Healthcare
Inc. (Nasdaq:CHNG) (“Change”) to merge
SpinCo with and into Change.
“We are very pleased to launch the split-off of our investment
in Change Healthcare. We have concluded that now is the appropriate
time to distribute our remaining stake in Change Healthcare,” said
Brian Tyler, chief executive officer, McKesson. “We expect this
exchange offer will continue to deliver value to McKesson
shareholders by reducing our number of outstanding shares in a
tax-efficient manner. This transaction better positions McKesson to
focus on our core business and signifies another important step in
McKesson’s transformation to become a simpler, more focused
organization.”
The exchange offer represents the next step in McKesson’s
planned exit from its investment in Change Healthcare, which will
be effected through a “Reverse Morris Trust” transaction. In the
exchange offer, McKesson stockholders will have the opportunity to
exchange their shares of McKesson common stock for shares of SpinCo
common stock, which will be immediately converted into an equal
number of shares of Change common stock upon completion of the
proposed merger, in each case subject to certain customary terms
and conditions. The exchange offer and merger are generally
expected to be tax-free to participating McKesson stockholders for
U.S. federal income tax purposes except to the extent of any cash
received in lieu of fractional shares of Change common stock.
Details of the Exchange Offer:
- Holders of McKesson common stock will have the opportunity to
exchange some or all of their shares for SpinCo common stock at a
7.0% discount per-share value, subject to an upper limit (as
described below).
- The discount means that tendering stockholders are expected to
receive approximately $107.53 of SpinCo common stock for every $100
of McKesson common stock tendered and accepted in the exchange
offer.
- The number of shares a McKesson stockholder can receive in the
exchange offer is subject to an upper limit of 11.4086 shares of
SpinCo common stock for each share of McKesson common stock
tendered and accepted in the exchange offer.
- If the upper limit is in effect, then the exchange ratio will
be fixed at that limit and tendering stockholders will receive less
than $107.53 of SpinCo stock for each $100 of McKesson common
stock.
- McKesson will offer 175,995,192 shares of SpinCo common stock
in the exchange offer. The number of shares of McKesson common
stock that will be accepted in the exchange offer will depend on
the final exchange ratio, the number of shares of McKesson common
stock tendered and whether the upper limit is in effect.
- SpinCo common stock will not be transferred to participating
stockholders following the exchange offer. Such participants will
instead receive shares of Change common stock in the merger
immediately following the completion of the exchange offer. No
trading market currently exists or will exist for shares of SpinCo
common stock.
- The exchange offer is scheduled to expire at 11:59 p.m., New
York City time, on March 9, 2020, unless the exchange offer is
extended or terminated.
- Holders of McKesson common stock may withdraw their tendered
shares at any time before the expiration date of the exchange
offer.
- Participants in the McKesson Corporation 401(k) Retirement
Savings Plan (the “McKesson 401(k)
Plan”) will receive special directions from the plan
administrator of the McKesson 401(k) Plan and to allow sufficient
time for the tender of shares by the trustee of the McKesson 401(k)
Plan, plan participants must provide the requisite instructions as
directed by 4:00 p.m., New York City time, on March 3, 2020, unless
the exchange offer is extended or terminated.
Subject to the upper limit, the final exchange ratio used to
determine the number of shares of SpinCo common stock that
participating stockholders will receive for each share of McKesson
common stock accepted in the exchange offer will be calculated by
McKesson by reference to the simple arithmetic average of the daily
volume–weighted average prices, on each of the three Valuation
Dates (as defined below), of McKesson common stock and Change
common stock on the New York Stock Exchange and The Nasdaq Global
Select Market, respectively, during a period of three consecutive
trading days (the “Valuation Dates”)
ending on and including the second trading day preceding the
expiration date of the exchange offer. Based on an expiration date
of March 9, 2020, the Valuation Dates are expected to be March 3,
March 4 and March 5, 2020. Unless the exchange offer is extended or
terminated, the final exchange ratio will be announced in a press
release no later than 11:59 p.m., New York City time, on March 5,
2020, and the exchange offer will expire at 11:59 p.m., New York
City time, on March 9, 2020, leaving two trading days between the
date that the final exchange ratio is announced and the expiration
of the exchange offer.
The final exchange ratio, as well as a daily indicative exchange
ratio beginning at the end of the third day of the exchange offer
period, will also be available at www.dfking.com/McKesson.
Immediately following the completion of the exchange offer,
SpinCo will merge with and into Change, whereby the separate
corporate existence of SpinCo will cease and Change will continue
as the surviving company. In the merger, each share of SpinCo
common stock will be converted into one share of Change common
stock. Change will issue 175,995,192 shares of Change common stock
in the merger.
The exchange offer will be subject to proration if the exchange
offer is oversubscribed, and the number of shares accepted in the
exchange offer may be fewer than the number of shares tendered.
If the exchange offer is consummated but not fully subscribed,
or if the upper limit is in effect and not all of the shares of
SpinCo common stock owned by McKesson are distributed pursuant to
the exchange offer, the remaining shares of SpinCo common stock
owned by McKesson will be distributed in a spin-off on a pro rata
basis to McKesson stockholders whose McKesson common stock remains
outstanding after the consummation of the exchange offer.
The transaction is subject to customary closing conditions,
including required regulatory approvals. Change’s board of
directors previously approved the Merger and the Merger Agreement
prior to the execution of the Merger Agreement on December 20,
2016. On January 17, 2017, the stockholders of Change approved the
Merger, the Merger Agreement and the transactions contemplated
thereby.
Upon completion of the merger, approximately 51 percent of the
outstanding shares of Change common stock are expected to be held
by pre-merger holders of McKesson common stock, and approximately
49 percent of the outstanding shares of Change common stock are
expected to be held by pre-merger holders of Change common
stock.
The terms and conditions of the exchange offer are more fully
described in a registration statement on Form S-4 and Form S-1,
including a prospectus forming a part thereof, filed by SpinCo with
the U.S. Securities and Exchange Commission (the “SEC”) today and a tender offer statement on
Schedule TO filed by McKesson with the SEC today.
For more information about the exchange offer, please visit
www.dfking.com/McKesson or contact the information agent, D.F. King
& Co., at 1-866-304-5477 (toll-free in the United States) and
1-212-269-5550 (outside of the United States).
In connection with the transactions, Goldman Sachs & Co. LLC
is acting as financial advisor and Davis Polk & Wardwell LLP is
acting as legal advisor to McKesson.
Forward-Looking Statements
This press release contains certain statements about McKesson,
SpinCo and Change that are “forward-looking statements” within the
meaning of Section 27A of the United States Securities Act of 1933,
as amended, and Section 21E of the United States Securities
Exchange Act of 1934, as amended. These matters involve risks and
uncertainties as discussed in McKesson’s and Change’s respective
periodic reports on Form 10-K and Form 10-Q and current reports on
Form 8-K, filed from time to time with the SEC). The
forward-looking statements contained in this press release may
include statements about the expected effects on McKesson, SpinCo
and Change of the separation of SpinCo from McKesson and the merger
of SpinCo with and into Change (collectively, the “Transactions”);
the anticipated benefits of the Transactions and McKesson’s,
SpinCo’s and Change’s anticipated financial results; and also
include all other statements in this press release that are not
historical facts. Without limitation, any statements preceded or
followed by or that include the words “targets,” “plans,”
“believes,” “expects,” “intends,” “will,” “likely,” “may,”
“anticipates,” “estimates,” “projects,” “should,” “would,” “could,”
“positioned,” “strategy,” “future,” or words, phrases, or terms of
similar substance or the negative thereof, are forward-looking
statements. These statements are based on the current expectations
of the management of McKesson, SpinCo and Change (as the case may
be) and are subject to uncertainty and to changes in circumstances
and involve risks and uncertainties that could cause actual results
to differ materially from those expressed or implied in such
forward-looking statements. In addition, these statements are based
on a number of assumptions that are subject to change. Such risks,
uncertainties and assumptions include, but are not limited to:
changes in the healthcare industry and regulatory environment;
fluctuations in foreign currency exchange rates; material adverse
resolution of pending legal proceedings, including those related to
the distribution of controlled substances; cyberattack, natural
disaster, or malfunction of sophisticated internal computer systems
to perform as designed; the potential inadequacy of insurance to
cover property loss or liability claims; the satisfaction of the
conditions to the Transactions and other risks related to the
completion of the Transactions and actions related thereto;
McKesson’s and Change’s ability to complete the Transactions on the
anticipated terms and schedule, including the ability to obtain
regulatory approvals; the anticipated tax treatment of the
Transactions and related transactions; the expansion and growth of
Change’s operations; ongoing risks related to the price or trading
volume of Change’s common stock; failure to pay dividends to
holders of Change’s common stock; impairment charges for goodwill;
and the risk that disruptions from the Transactions will harm
McKesson’s, SpinCo’s or Change’s businesses. However, it is not
possible to predict or identify all such factors. Consequently,
while the list of factors presented here is considered
representative, no such list should be considered to be a complete
statement of all potential risks and uncertainties. Unlisted
factors may present significant additional obstacles to the
realization of forward-looking statements. Forward-looking
statements included herein are made as of the date hereof, and none
of McKesson, SpinCo or Change undertakes any obligation to update
publicly such statements to reflect subsequent events or
circumstances.
Important Notices and Additional Information
In connection with the Transactions, McKesson has filed with the
SEC a Schedule TO with respect to the exchange offer, SpinCo has
filed with the SEC a registration statement on Form S-4 and Form
S-1 containing a prospectus of SpinCo relating to the exchange
offer, and Change has filed with the SEC a registration statement
on Form S-4 relating to the Transactions. INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ THESE DOCUMENTS AND ANY AMENDMENTS TO
THESE DOCUMENTS WHEN THEY BECOME AVAILABLE, AS WELL AS ANY OTHER
RELEVANT DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ABOUT MCKESSON, SPINCO AND CHANGE AND THE TRANSACTIONS. Investors
and security holders may obtain these materials and other documents
filed with the SEC free of charge at the SEC’s website,
www.sec.gov. In addition, copies of these materials may be obtained
free of charge by accessing McKesson’s website at www.mckesson.com,
or from Change by accessing Change’s website at
www.changehealthcare.com.
To obtain copies of the exchange offer prospectus and related
documents, or for questions about the exchange offer or how to
participate, please visit the website that McKesson will maintain
for the exchange offer at www.dfking.com/McKesson or contact the
information agent, D.F. King & Co., at 1-866-304-5477
(toll-free in the United States) and 1-212-269-5550 (outside of the
United States).
None of McKesson, SpinCo, Change or their respective directors
or officers makes any recommendation as to whether any McKesson
stockholder should participate in the exchange offer. This
communication is for informational purposes only and shall not
constitute an offer to sell or the solicitation of an offer to sell
or the solicitation of an offer to buy any securities, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
About McKesson Corporation
McKesson Corporation is a global leader in healthcare supply
chain management solutions, retail pharmacy, community oncology and
specialty care, and healthcare information technology. McKesson
partners with pharmaceutical manufacturers, providers, pharmacies,
governments and other organizations in healthcare to help provide
the right medicines, medical products and healthcare services to
the right patients at the right time, safely and cost-effectively.
United by our ICARE shared principles, our employees work every day
to innovate and deliver opportunities that make our customers and
partners more successful — all for the better health of patients.
McKesson has been named a “Most Admired Company” in the healthcare
wholesaler category by FORTUNE, a “Best Place to Work” by the Human
Rights Campaign Foundation, and a top military-friendly company by
Military Friendly. For more information, visit
www.mckesson.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200210005429/en/
Holly Weiss Investors 972-969-9174 Holly.Weiss@McKesson.com
David Matthews Media 214-952-0833
David.Matthews@McKesson.com
McKesson (NYSE:MCK)
Historical Stock Chart
From Jun 2024 to Jul 2024
McKesson (NYSE:MCK)
Historical Stock Chart
From Jul 2023 to Jul 2024