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Bergen Brunswig expands
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January 11, 1999: 10:53 a.m. ET
Drug distributor buying PharMerica, supplier to nursing homes, for $1.4B
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NEW YORK (CNNfn) -- Bergen Brunswig Corp., the pharmaceutical and medical-surgical supply distributor, is continuing a buying spree with the $1.4 billion acquisition of PharMerica Inc., a Tampa, Fla.-based provider of pharmaceuticals to long-term care and alternate site health services.
Under terms of the agreement, Orange, Calif.-based Bergen Brunswig (BBC) will swap 0.275 share of its common stock for each PharMerica (DOSE) share tendered. Friday's closing price of $32.50 for Bergen Brunswig stock values PharMerica at about $8.94 a share, well above its $6.50 a share close Friday.
Bergen Brunswig also says it will issue about 25 million shares as part of the merger and will convert PharMerica stock options into Bergen Brunswig options at the swap rate. Bergen Brunswig will assume about $580 million in PharMerica debt.
PharMerica, with 89.7 million fully diluted shares outstanding, will own about 18 percent of Bergen Brunswig once the transaction is completed.
PharMerica has annual sales of about $1.2 billion, compared with the $17.1 billion in sales of Bergen Brunswig. Its services affect about 500,000 patients, mostly older Americans being cared for in nursing homes, assisted living facilities, specialty hospitals and in their homes.
Bergen Brunswig says the definitive agreement is subject to regulatory approvals and expects to complete the deal in the second quarter of 1999.
"This transaction further accelerates our earnings growth and is expected to raise our EBITDA margins by over 40 percent," says Bergen Brunswig President Donald Roden, citing 22 percent growth in the company's earnings in fiscal 1998, ended Sept. 30.
The company says the transaction builds on the acquisition of Statlander, a specialty care provider of treatment to prisons and patients suffering HIV or undergoing transplant, psychological or infertility therapies.
The deal also follows on the heels of the $100 million acquisition of BayCare Health System, a chain of hospitals in the Tampa area, that was announced last week. 
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