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AmeriSource, Bergen Brunswig map megamerger

The pace of consolidation in the drug wholesale industry sped up late last month when AmeriSource Health Corp. and Bergen Brunswig Corp. unveiled a merger of equals that they valued at $7 billion.

The new combined company, dubbed AmeriSource-Bergen Corp., will generate approximately $35 billion in annual revenues and achieve more than $125 million in operating savings by the end of the third year after the stock-for-stock deal is finalized. AmeriSource stockholders will own 51% of the new company's estimated 103 million shares outstanding. Each Bergen common stock will be converted to 0.37 share of AmeriSource common stock, while each AmeriSource share will be converted into one share of the new company. If the deal is approved, AmeriSource-Bergen, Cardinal Health Inc., and McKessonHBOC Inc. will control nearly 90% of the drug wholesale industry. The Big Three would be roughly the same size.

The new company's CEO/president will be R. David Yost, AmeriSource's current chairman/CEO. Bergen Brunswig's chairman/CEO Robert E. Martini will become chairman of the combined firm. Company headquarters will be in AmeriSource's Valley Forge, Pa., home but a West Coast management center will be located in Orange, Calif., Bergen's stomping grounds.

Although the two separate independent pharmacy programs sponsored by the wholesalers were described as complementary, officials did not discuss whether the new company will merge or alter those programs. AmeriSource has about 2,500 independents in its Family Pharmacy program, while Bergen has more than 2,000 independents enrolled in its Good Neighbor Pharmacy program.

Pharmacists at The Medicine Centre in Portland, Conn., are watching the merger with their fingers crossed, said Gene Memoli, R.Ph., senior v.p.-pharmaceutical care. AmseriSource was the pharmacy's primary wholesaler, and Bergen was its secondary vendor. "I guess now we'll have to find a new secondary," he said. "AmeriSource has always been very independent-friendly, treating us like wholesalers did in the old days, with service. If you have a special request, need support, or need a special delivery, [AmeriSource is] there. I hope none of this changes."

The National Community Pharmacists Association issued no official statement after the merger was unveiled. However, following a cursory review, the group representing independent pharmacy owners does not anticipate major issues with the deal, said spokesman Todd Dankmyer.

Although shareholders must give the deal a thumbs-up before it can go through, the toughest hurdle for the AmeriSource-Bergen merger will be going under the Federal Trade Commission's microscope. The watchdog agency scuttled two drug wholesaler megamergers in 1998 when it nixed Cardinal's proposed purchase of Bergen and McKessonHBOC's planned merger with AmeriSource because the moves would have concentrated too much power in the hands of Cardinal and McKesson. However, the regulatory agency did not raise any objections to Cardinal's recent purchase of rival Bindley Western Industries.

The merged company will provide "greater depth of product offerings," Martini said in a statement. The deal will combine Bergen's PharMerica long-term care pharmacy, workers' compensation business, and the oncology, vaccine, and biotech products of its ASD division with AmeriSource's health-care services.

Carol Ukens

 

Carol Ukens. AmeriSource, Bergen Brunswig map megamerger. Drug Topics 2001;7:20.