San Francisco-based healthcare services behemoth McKesson Corp. has signed a definitive agreement to acquire New Britain, CT-based Moore Medical, a cataloger of medical and surgical supplies, for about $40 million. The acquisition, subject to a vote by Moore’s shareholders, is expected to close in the second quarter.
The $137.8 million Moore Medical will become part of the $63.1 billion McKesson’s Richmond, VA-based medical-surgical business.
Although Moore and McKesson competed for business in some larger physician practices, the acquisition gives both companies an opportunity to go after new markets. For example, McKesson isn’t a presence in some key Moore markets, such as podiatry, corrections, and occupational healthcare. And Moore gets an opportunity to leverage McKesson’s breadth of products, which will enable it to compete with the likes of Henry Schein and Darby Group.
“The depth and breadth of McKesson’s product line will allow us to provide our customers a complete service offering on a scale that we have lacked until now. We didn’t have the scale before to compete with [the larger businesses],” says Linda Autore, Moore’s president/CEO. “Now we can take full advantage of McKesson’s 300,000 SKUs.” Moore Medical currently offers about 15,000 SKUs.
The first order of business, Autore adds, is determining the “going to market” strategy of the combined businesses. “The addition of Moore Medical’s established telesales, direct marketing, and catalog capabilities to our existing field sales force will provide us with a more comprehensive offering for reaching the entire continuum of healthcare,” Gary Muensterman, president of McKesson Medical-Surgical, said in a statement.
No layoffs are expected for Moore Medical’s 305 employees. The cataloger will likely remain in New Britain.
Under the agreement, McKesson will pay $12.00 in cash for each outstanding share of Moore Medical. The transaction represents a premium of 54% over the average closing price for Moore Medical’s common stock for the 30 days ending Jan. 16. That day, Moore’s stock closed at $10.50–a 52-week high.