McKesson and a Private Equity Firm Agree to a $5.8 Billion Takeover of Option Care Health

Keypoints:

• Clayton, Dubilier & Rice (CD&R) and McKesson Corporation agreed to buy Option Care Health for $32.05 per share in cash
• The deal values the home infusion provider at about $5.8 billion including debt
• The price is a premium of roughly 37% to the 5 October closing price
• CD&R will own about 51%, while McKesson invests about $1.4 billion for the other 49%
• Option Care shares jumped about 33% on the news

Option Care Health agreed on 6 October to be taken private by CD&R and McKesson Corporation. The buyers will pay $32.05 per share in cash. That values the company at about $5.8 billion including debt and sits roughly 37% above Monday's close. Shares rose about 33% and now trade just under the offer price.

Option Care provides home and alternate-site infusion therapy. Nurses and pharmacies deliver intravenous medicines to patients outside hospitals. The sector has grown with an aging population and a push toward outpatient care. The Financial Times had reported on Monday that the two sides were in advanced talks.

The structure is unusual. CD&R will hold about 51% of the private company. McKesson will invest about $1.4 billion for the remaining 49%. The agreement also sets a path for McKesson to buy CD&R's stake later if conditions are met and regulators approve.

That setup lets McKesson join the deal without consolidating a $5.8 billion buyout on day one. The agreement includes a no-shop provision. Option Care is generally barred from seeking competing offers once signing is complete. The shares will stop trading on Nasdaq when the deal closes.

The timing follows a rough stretch for the stock. Before the report, the market value was about $3.5 billion and the shares were down about 27% for the year. Analysts at William Blair had called the valuation low and attractive to the buyers. They said competing bids would not surprise them. A share price this close to the offer suggests the market sees little chance of one.