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Drug deals canceled
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August 7, 1998: 9:34 a.m. ET
McKesson-AmeriSource and Bergen-Cardinal call off mergers
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NEW YORK (CNNfn) - One week after a federal judge granted a government request to block the two mergers involving the four largest U.S. drug wholesalers, the companies announced Friday they have terminated their merger agreements.
Bergen Brunswig Corp. and Cardinal Health Inc. said they have jointly decided to call off their planned $2.62-billion merger, while McKesson Corp. canceled its $2.25-billion bid for AmeriSource Health.
The Federal Trade Commission had sought a preliminary injunction against the mergers, noting that the two resulting companies would control 80 percent of the market, substantially reducing competition.
U.S. District Court Judge Stanley Sporkin granted the injunction last Friday.
"Although we are disappointed with the federal court's decision not to allow this synergistic deal to be executed, we respect Judge Sporkin's opinion," said R. David Yost, AmeriSource president and chief executive officer. "Given our size, we feel AmeriSource is in an excellent position to participate in the continuing consolidation in the drug distribution industry in an effort to drive costs out of the system."
Bergen Brunswig president and CEO Donald Roden took a slightly harsher tone in his comments.
"We remain convinced that the formation of Cardinal Bergen Health would have been pro-competitive, lowering costs to our customers and ultimately benefiting health-care consumers," he said. "However, after spending a full year on the transaction, we have elected to jointly terminate the merger agreement rather than pursue the costly and time-consuming appeal process with the uncertainty of prevailing."
AmeriSource (AAS) shares gained 5/8 in Thursday trading to close at 50-11/16, while McKesson (MCK) shares finished at 79-5/16, up 1-5/8. Bergen Brunswig (BBC) shares closed at 42-3/4, up 5/16, and Cardinal Health (CAH) shares finished unchanged at 92-13/16. 
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