Merger of Equals to Deliver Expanded Growth, Enhanced Customer
Offerings and Synergies Of More Than $125 Million
VALLEY FORGE, Penn. & ORANGE, Calif.--(BUSINESS WIRE)--March 19,
2001--
AmeriSource Health Corporation (NYSE:AAS) and Bergen Brunswig
Corporation (NYSE: BBC) today announced that the two companies have
agreed to combine in a $7 billion merger of equals.
The stock-for-stock transaction will create a new company, called
AmeriSource-Bergen Corporation, with approximately $35 billion in
annual operating revenue. As a combined company, AmeriSource-Bergen
expects to generate enhanced growth, achieve annual operating
synergies of more than $125 million by the end of the third year and
produce substantial benefits for customers and employees. The new
company will have its headquarters in Valley Forge, Pennsylvania, and
its west coast management center will be located in Orange, CA.
Under the terms of the agreement, which has been unanimously
approved by both Boards of Directors, each share of Bergen Brunswig
common stock will be converted into 0.37 share of AmeriSource-Bergen
common stock while each share of AmeriSource common stock will be
converted into one share of AmeriSource-Bergen common stock. The
transaction will be tax free to shareholders of both companies. The
new company will have approximately 103 million shares outstanding,
with current AmeriSource shareholders owning approximately 51% of the
combined company and current Bergen Brunswig shareholders owning about
49%. Based on closing stock prices on March 16, 2001, the new company
will have a pro forma market capitalization of approximately $5
billion and approximately $2 billion of debt. The transaction is
expected to be accounted for as a purchase transaction under new
guidelines for business combinations proposed by the Financial
Accounting Standards Board (FASB).
Upon closing, under the proposed FASB purchase accounting rules,
the transaction is expected to be non-dilutive, before synergies and
special items.
The combination is expected to close during the summer of 2001.
The transaction is subject to Hart-Scott-Rodino review, approval by
shareholders of AmeriSource and Bergen Brunswig, confirmation of the
new FASB purchase accounting rules, and other customary closing
conditions.
Strategic Rationale
"Bringing together AmeriSource and Bergen makes great sense
strategically, financially, operationally and culturally. Our two
companies have significant complementary strengths that will allow us
to deliver enhanced benefits for shareholders, customers, suppliers
and employees," said Robert E. Martini, Chairman and Chief Executive
Officer of Bergen Brunswig, who will become Chairman of the new
company. "This is a combination of equals. But more than that, both
companies understand the pharmaceutical distribution business and have
corporate cultures that are admired for their focus on quality,
efficiency and customer satisfaction.
"We also feel that PharMerica's long-term-care pharmacies and its
workers' compensation business as well as ASD's specialty healthcare
offerings of oncology, vaccines and biotech products, which are a part
of Bergen's portfolio of businesses, will enhance AmeriSource-Bergen's
position in healthcare services by providing greater depth of product
offerings."
R. David Yost, Chairman and Chief Executive Officer of
AmeriSource, who will become Chief Executive Officer and President of
AmeriSource-Bergen, said, "As independent companies, AmeriSource and
Bergen each have tremendous strengths and excellent growth
opportunities. Together, we will have an enhanced ability to grow and
create new offerings and innovative programs to further meet our
customers' growth needs. This is a true combination of equals and our
approach to the integration will be to select the best people,
programs and operations from each company. With the synergy of our
complementary programs and resources, this combination benefits the
customers of both companies. In addition, it enhances our confidence
that we can sustain a long-term earnings per share growth rate of 20
percent and continue to create significant shareholder value."
AmeriSource and Bergen match up well in geography and customer
groups. While both companies operate nationally, AmeriSource has a
larger presence in the Eastern U.S., and Bergen's distribution
business has a larger presence in the West. The companies have
complementary independent retail pharmacy programs. Both companies
supply health systems customers which will benefit from the addition
of Bergen's alternate site business. Also, AmeriSource's American
Health Packaging unit will provide added benefits to Bergen's
PharMerica and drug distribution operations. Throughout all their
operations AmeriSource and Bergen Brunswig share a common culture of
providing outstanding service and making customer satisfaction
paramount.
Management
The senior management of AmeriSource-Bergen will also include Kurt
J. Hilzinger, the President and Chief Operating Officer of
AmeriSource, who will become Executive Vice President and Chief
Operating Officer of the combined company, and Neil F. Dimick,
Bergen's current Chief Financial Officer, who will become Executive
Vice President and Chief Financial Officer of the new Company.
The new Company structure also includes an Executive Management
Committee. Led by CEO Yost, the AmeriSource-Bergen committee will
include Hilzinger and Dimick as well as three Senior Vice Presidents.
They are Brent R. Martini, currently President of the drug
distribution business at Bergen, who will become President of
AmeriSource-Bergen Drug Company; Charles J. Carpenter who will
continue as President of PharMerica, now a Bergen subsidiary; and
Steven H. Collis, currently President of Bergen's ASD Specialty
Healthcare, Inc, who will continue to head the unit under
AmeriSource-Bergen.
The Board of Directors of the new Company will have ten members.
In addition to Martini and Yost, there will be a total of eight
independent directors, with three each from AmeriSource and Bergen
Brunswig. Also, AmeriSource-Bergen will nominate two additional
unaffiliated directors.
Synergies
The companies expect to achieve more than $125 million in annual
operating savings by the end of the third year after the transaction
closes.
"Our combination will result in fewer, but larger and more
efficient distribution centers, consolidation of our corporate staffs,
efficiencies in purchasing, lower-cost financing, and very
significantly enhanced customer offerings and programs," said Yost.
"Pharmaceutical distribution represents one of the very few segments
in healthcare that has met the challenge of reducing costs steadily
and consistently over time, and this combination will accelerate that
trend. Both companies have previously demonstrated the ability to take
costs out of merged operations. The experience of the combined
management teams in integrating pharmaceutical distribution businesses
gives us confidence that this melding of companies will be smooth and
productive, constantly meeting or exceeding customers' expectations
for exceptional service."
Mr. Yost continued, "While achieving operational efficiencies is
essential, we also see enhanced growth opportunities by creating new
customer programs and expanding our offering of value-added services.
These programs, which streamline the supply chain in a way that
improves overall efficiency, are beneficial to us as well as to our
customers."
Yost concluded, "Our new company will operate a more effective and
efficient healthcare services business, one that will emerge as the
leader in our growing industry."
Under the proposed new business combination accounting guidelines,
the companies anticipate that there will be approximately $10 million
in annual expenses related to purchase accounting adjustments. These
adjustments will be more than offset by the elimination of $23 million
per year of goodwill amortization for the combined company.
AmeriSource was represented by Goldman, Sachs & Co. and Bergen
Brunswig was represented by Merrill Lynch & Co.
Webcast Conference Call
AmeriSource and Bergen will host a conference call this morning at
10:30 a.m. Eastern Standard Time to discuss the merger. The conference
call will be simultaneously broadcast live over the Internet.
Listeners may access the conference call live and archived over the
Internet at http://www.amerisource.com. Please allow 15 minutes prior
to the call to visit the site and download and install any necessary
audio software.
In addition, the companies will host an investor presentation at
1:30 p.m. Eastern Standard Time in New York. The presentation will be
broadcast live over the Internet. Listeners may access the
presentation live and archived over the Internet at
www.amerisource.com. Please allow 15 minutes prior to the start of the
presentation to visit the site and download and install any necessary
audio and video software.
About AmeriSource
AmeriSource Health Corporation, with more than $13 billion in
annualized operating revenue, is a leading distributor of
pharmaceutical and related healthcare products and services, and the
industry's largest provider of pharmaceuticals to acute care/health
systems customers. Headquartered in Valley Forge, PA, the Company
serves its base of about 15,000 customer accounts through a national
network of 22 strategically located drug distribution facilities. For
news and additional information about the company, visit its web site
at www.amerisource.com.
About Bergen Brunswig
Bergen Brunswig Corporation, headquartered in Orange County,
California, is a leading supplier of pharmaceuticals and specialty
healthcare products as well as information management solutions and
consulting services. With $22 billion in annualized operating
revenues, Bergen's customers include the nation's healthcare providers
(hospitals, nursing homes, physicians), drug stores, manufacturers and
patients. Through its Drug Company's 30 distribution centers and its
other subsidiary companies, Bergen provides product distribution,
logistics, pharmacy management programs, and Internet fulfillment
strategies designed to reduce costs and improve patient outcomes
across the entire healthcare spectrum. Bergen Brunswig press releases
are available on the Company's website at www.bergenbrunswig.com.
Forward-Looking Statements
The foregoing communication contains certain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. These
statements are based on management's current expectations and are
subject to uncertainty and changes in circumstances. Actual results
may vary materially from the expectations contained in the
forward-looking statements. The forward-looking statements herein
include statements addressing future financial and operating results
of AmeriSource and Bergen Brunswig and the timing, benefits and other
aspects of the proposed merger.
The following factors, among others, could cause actual results to
differ materially from those described in the forward-looking
statements: inability to obtain, or meet conditions imposed for,
governmental approvals for the transaction; failure of the
stockholders of AmeriSource and Bergen Brunswig to approve the merger;
the risk that the businesses of AmeriSource and Bergen Brunswig will
not be integrated successfully; failure to obtain and retain expected
synergies; and other economic, business, competitive and/or regulatory
factors affecting the businesses of AmeriSource and Bergen Brunswig
generally. More detailed information about these factors is set forth
in AmeriSource's and Bergen Brunswig's filings with the Securities and
Exchange Commission, including each of their Annual Reports on Form
10-K for fiscal 2000 and their most recent quarterly reports on Form
10-Q. AmeriSource and Bergen Brunswig are under no obligation to (and
expressly disclaim any such obligation to) update or alter their
forward-looking statements whether as a result of new information,
future events or otherwise.
Additional Information
In connection with their proposed merger, AmeriSource and Bergen
Brunswig will file a joint proxy statement/prospectus with the
Securities and Exchange Commission. Investors and security holders are
advised to read the joint proxy statement/prospectus when it becomes
available, because it will contain important information. Investors
and security holders may obtain a free copy of the joint proxy
statement/prospectus (when available) and other documents filed by
AmeriSource and Bergen Brunswig at the Securities and Exchange
Commission's web site at www.sec.gov. The joint proxy
statement/prospectus and such other documents may also be obtained for
free from AmeriSource or from Bergen Brunswig by directing such
request to AmeriSource Health Corporation, General Counsel, 1300
Morris Drive, Suite 100, Chesterbrook, Pennsylvania 19087-5594,
Telephone: (610) 727-7000; or to Bergen Brunswig Corporation,
Attention: Corporate Secretary, 4000 Metropolitan Drive, Orange,
California 92868-3510, Telephone: (714) 385-4000.
Participants in Solicitation
AmeriSource and Bergen Brunswig and their respective directors,
executive officers and other members of their management and employees
may be deemed to be participants in the solicitation of proxies from
their respective stockholders in connection with the proposed merger.
Information concerning AmeriSource's participants in the solicitation
is set forth in AmeriSource's Current Report on Form 8-K filed with
the Securities and Exchange Commission on March 19, 2001, and
information concerning Bergen Brunswig's participants in the
solicitation is set forth in Bergen Brunswig's Current Report on Form
8-K filed with the Securities and Exchange Commission on March 19,
2001.
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CONTACT: |
AmeriSource Health Corporation |
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Michael N. Kilpatric, 610/727-7118 |
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mkilpatric@amerisource.com |
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or |
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Bergen Brunswig Corporation |
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Donna Dolan, 714/385-4226 |
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donna.dolan@bergenbrunswig.com |
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