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McKesson to acquire Rexall Health from Katz Group

BY Michael Johnsen
SAN FRANCISCO — McKesson announced Wednesday its agreement to acquire Rexall Health from Katz Group for $3 billion Canadian ($2.2 billion in U.S. dollars). The acquisition is expected to strengthen McKesson’s position in Canada’s pharmaceutical supply chain, the company said, noting that the two companies have worked together for more than 20 years.
 
As part of the transaction, McKesson intends to acquire Rexall Health’s business, including approximately 470 retail pharmacies. Rexall Health will help McKesson leverage its existing portfolio of assets to drive growth along the entire value chain, particularly in Ontario and Western Canada — two of Canada’s fastest growing regions,
 
“The acquisition of Rexall Health supports McKesson’s commitment to drive value in the industry by improving healthcare solutions delivered in the pharmacy; it enhances our ability to provide best-in-class pharmacy care through an expanded retail footprint for patients across Canada,” McKesson Corp. chairman and CEO John Hammergren said. “Canada’s healthcare environment is rapidly evolving; it is marked by a move of primary care into pharmacy and increasingly complex patient demand. With today’s announcement, McKesson will bring together the strengths and expertise of our diverse portfolio to address challenges and opportunities in delivering the very best patient care.” 
 
“I have the utmost confidence that Rexall Health will continue to flourish under McKesson’s ownership and Jürgen Schreiber’s continued leadership," Katz Group chairman Daryl Katz said. "I want to thank everyone who has helped to make Rexall Health a success over the past two decades, including all of our current and former employees, our partners and above all our customers for their loyalty and dedication. Going forward, Katz Group will continue to invest in the growth of our three other lines of business: real estate, sports & entertainment and private and public investments.”
 
“Today is an exciting day for Rexall Health and its employees,” Rexall Health CEO Jürgen Schreiber said. “With McKesson, we will ensure Rexall Health continues to deliver the highest quality care to its patients and service to its customers."
 
Like McKesson Canada, the operations of Rexall Health will be part of McKesson’s Distribution Solutions segment, which is under the purview of Paul Julian, EVP and group president. Rexall Health will continue to have a dedicated management team in Canada led by Schreiber, while retaining the companies existing brand. 
 
“For over one hundred years in Canada, McKesson has helped build a strong network of independent pharmacies,” said Alain Champagne, president, McKesson Canada. “With the acquisition of Rexall Health, McKesson will continue to deliver value-added pharmacy solutions through an expanded portfolio, while providing operational excellence to small business owners, independent pharmacists and our pharmaceutical distribution customers.”
 
Once completed, the acquisition of Rexall Health will enhance McKesson’s retail pharmacy capabilities and procurement scale, the company said. McKesson Canada said it expects its customer base, including its independent pharmacists, to benefit from competitive pharmacy solutions and industry leading service levels.
 
The acquisition, which will be funded by a mix of cash and debt, is expected to close late in calendar year 2016. 
 
The transaction is subject to review under the Investment Canada Act and by the Competition Bureau of Canada.
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