VALLEY FORGE, Pa. (AP) — AmeriSource Health Corp. is acquiring Bergen Brunswig Corp. in a $2.4 billion deal that will combine two of the nation's largest drug distributors.
The agreement, approved by both boards and announced Monday, will create a drug-distribution giant with nearly $35 billion in annual revenue, delivering pharmaceuticals and supplies to businesses such as drug stores, hospitals and health-maintenance organizations.
The new company would compete with McKesson HBOC and Cardinal Health Inc., which last month acquired Bindley Western Industries Inc. to form the biggest drug wholesaler.
AmeriSource, based in Valley Forge, will own about 51 percent of the combined entity, to be named AmeriSource-Bergen. It will also assume $1.3 billion in debt as part of the deal.
Bergen shareholders will receive 0.37 of a share for each share of the Orange, Calif., company they own, while AmeriSource shareholders will receive one share.
The combination is expected to create $125 million in annual cost savings by the third year.
"Bringing together AmeriSource and Bergen makes great sense strategically, financially, operationally and culturally," said Robert E. Martini, chairman and chief executive officer of Bergen Brunswig, who will become chairman of the new company.
"Our two companies have significant complementary strengths that will allow us to deliver enhanced benefits for shareholders, customers, suppliers and employees," he said.
Bergen, with about $23 billion in revenue, is about twice the size of AmeriSource, but AmeriSource's market capitalization of $2.8 billion is bigger than Bergen's market value of $2.2 billion.
The transaction may be scrutinized by the Federal Trade Commission, which in 1998 blocked Cardinal's proposed purchase of Bergen and McKesson's planned merger with AmeriSource. The FTC argued the deals would put too much power in the hands of McKesson and Cardinal.