M&A

AmeriSource, Bergen Brunswig to Merge in $2.4 Billion Deal

Drug distributors expect more than $125 million in operating synergies.
CFO.com StaffMarch 19, 2001

AmeriSource Health Corp. and Bergen Brunswig Corp. announced on Monday that the two drug distributors would merge into a new company in a stock-for-stock deal worth $2.4 billion with annual operating revenue of $35 billion.

Under the terms, Bergen Brunswig shareholders will receive 0.37 share of the new company, called AmeriSource-Bergen Corp. AmeriSource shareholders receive a one-for-one stock exchange ratio. The new company will have a market capitalization of about $5 billion and $2 billion in debt.

Based on AmeriSource’s closing price of $48.48 on Friday, and Bergen Brunswig’s 136.1 million fully diluted shares outstanding, Bergen is valued at $17.94 a share, or $2.4 billion. After the expected close of the transaction this summer, Amerisource shareholders will own about 51 percent of the company while Bergen shareholders will own about 49 percent.

Under the proposed Financial Accounting Standards Board (FASB) rules, the transaction is expected to be non-dilutive, before synergies and special items. The companies anticipate about $10 million in annual expenses related to purchase accounting adjustments, but say that will be more than offset by the elimination of $23 million per year of goodwill amortization.

“Our combination will result in fewer, but larger and more efficient distribution centers, consolidation of our corporate staffs, efficiencies in purchasing, lower-cost financing, and very significantly enhanced customer offerings and programs,” said David Yost, AmeriSource’s chairman and CEO, in the press release. Yost will become CEO of the combined company.

Robert Martini, Bergen-Brunswig’s CEO, will be chairman. Also, Neil Dimick, Bergen’s CFO, and AmeriSource’s COO, will take on their respective roles at the new company.

The companies say they expect to achieve more than $125 million in annual operating savings by the end of the third year after the transaction closes. Goldman, Sachs & Co. represented AmeriSource while Merrill Lynch represented Bergen Brunswig.