Global investment firm KKR will buy PharMerica Corporation in a $1.4 billion deal, the companies announced in August.
As a “newly formed company” controlled by KKR, with Walgreens Boots Alliance Inc. on board as an investor, the firm will pay $909 million to acquire PharMerica and assume $490 million of the pharmacy provider’s debt. The deal is expected to close by early 2018.
The move makes sense for KKR, Edward Buthusiem, JD, a managing director at Berkeley Research Group, explained to McKnight’s.
“As a financial buyer in a going-private transaction, the KKR-Walgreens venture will seek to achieve synergistic value by combining Walgreens’ retail and mail-order operations with PharMerica’s nursing home and clinic-based pharmacy operations and using this purchasing power as potential leverage to negotiate better pricing at the wholesaler level,” Buthusiem said. “Similarly, the combination could also enable the new venture to negotiate more favorable arrangements with managed care entities.”
PharMerica CEO Gregory S. Weishar said in a statement that the acquisition “will deliver immediate and compelling value to all PharMerica shareholders, as well as substantial benefits to our clients and employees.”
“With the support of KKR and a strategic partner in Walgreens Boots Alliance, PharMerica will have additional resources and expertise to advance and grow the business,” Weishar said.
Discussion of PharMerica’s future had been hot since CVS announced its purchase of long-term care pharmacy giant Omnicare in 2015. Buthusiem noted that the transaction “does enable Walgreens to meet the competition from the CVS/Omnicare combination,” and that “one would expect this competition to result in more competitive pricing in the managed care network.”