McKesson to Separate IT Unit in Venture With Blackstone -- Update
June 28 2016 - 9:41AM
Dow Jones News
By Tess Stynes
Health-care giant McKesson Corp. on Tuesday said it plans to
form a health-care information-technology joint venture that it
expects to take public later in an initial public offering.
The planned company will combine most of McKesson's technology
segment with the bulk of Change Healthcare Holdings Inc., which is
majority owned by Blackstone Group LP.
McKesson would own 70% of the new company, with the rest owned
by Change Healthcare's shareholders, including Blackstone and
Hellman & Friedman LLC.
The new company has received commitments for $6.1 billion of
debt, with proceeds targeted to repay $2.7 billion of Change
Healthcare's debt, as well as make payments of $1.25 billion to
McKesson and $1.75 billion to Change Healthcare's holders.
The deal excludes McKesson's RelayHealth Pharmacy business and
its enterprise-information segment. McKesson separately said it
plans to explore strategic options for the EIS unit.
Earlier this month The Wall Street Journal reported that
McKesson was considering a separation of its information-technology
unit as the company grapples with pricing pressure in its core
drug-distribution business.
McKesson said the businesses in the new venture generated
combined revenue of $3.4 billion for the year ended March 31. The
venture aims to generate more than $150 million in annual cost
savings by the second year after closing, which is expected in the
first half of next year.
McKesson Chief Executive John H. Hammergren will be chairman of
the venture, while Change Healthcare CEO Neil de Crescenzo will
lead the new firm. Mr. Hammergren said the venture will unite
complementary capabilities from both companies to help customers
address complex financial and clinical challenges.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
June 28, 2016 09:26 ET (13:26 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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