VALLEY FORGE, Pa. & LOUISVILLE, Ky.--(BUSINESS WIRE)--Oct. 26,
2006--AmerisourceBergen Corporation (NYSE:ABC) and Kindred Healthcare,
Inc. (NYSE:KND) today announced that they have signed a definitive
agreement to combine their respective institutional pharmacy
businesses, PharMerica Long-Term Care ("PharMerica LTC") and Kindred
Pharmacy Services ("KPS"), into a new, independent, publicly traded
company. As previously announced in August 2006, the transaction is
intended to be tax-free to shareholders of both AmerisourceBergen and
Kindred, and the transaction is expected to be completed in the first
calendar quarter of 2007.
The new company will be the second largest in the institutional
pharmacy services market with revenues of approximately $1.9 billion
and a customer base of approximately 330,000 licensed beds in 41
states. Preliminary synergy cost savings from the combination continue
to be estimated at approximately $30 million.
Paul J. Diaz, Kindred President and Chief Executive Officer, said,
"Completion of the definitive agreement is a major step in creating
the new company and unlocking greater value for our shareholders. The
new company will join two companies with shared values centered on
customers, employees, and patients. Upon completion of this
transaction, Kindred's assets and resources will be concentrated on
its hospital, nursing center and contract rehabilitation businesses."
"Signing the definitive agreement is the critical milestone in
building this new company and opening up opportunities for
shareholders, associates and customers," said R. David Yost,
AmerisourceBergen Chief Executive Officer. "We are taking the best of
both organizations and building a strong national player in a growing
market. With this transaction, AmerisourceBergen will be in a stronger
position to focus on pharmaceutical distribution, specialty
pharmaceutical distribution and related services, and other
pharmaceutical supply channel services such as packaging."
Summary of Proposed Transaction:
- The combination is intended to be a tax-free transaction which
will result in AmerisourceBergen and Kindred shareholders each
holding 50 percent of the shares of the new company.
- In connection with the transaction, PharMerica LTC and KPS
will each make a one-time cash distribution, intended to be
tax-free, of up to $150 million to their respective parent
companies, subject to potential adjustments at the closing of
the proposed transaction.
- PharMerica LTC and KPS will fund the distribution by borrowing
up to $150 million each for a total of $300 million of new
debt. The new company will assume this debt as part of the
proposed merger. This new debt would be the only long-term
debt the new company assumes from the parent companies,
leaving it with significant financial flexibility.
- After the cash distribution, each of the institutional
pharmacy businesses would be separately spun off to
AmerisourceBergen and Kindred shareholders, to be followed
immediately by a stock-for-stock merger which would result in
AmerisourceBergen and Kindred shareholders each owning 50
percent of the new company.
- AmerisourceBergen currently provides pharmaceutical
distribution to both KPS and PharMerica LTC and under the
definitive agreement will continue to provide those services
to the new company. Kindred will provide information systems
support and some administrative support services to the new
company for a period of time.
- The parties continue to conduct a national search for a chief
executive officer and chief financial officer to lead the new
public company, and are exploring the appropriate location for
the new company's corporate headquarters.
- Deutsche Bank Securities is acting as financial adviser to
AmerisourceBergen and Lehman Brothers is acting as Kindred's
financial adviser.
In order to be completed, the proposed transaction will require
review of a registration statement for the new company by the
Securities and Exchange Commission and a favorable determination by
the Internal Revenue Service. The proposed transaction also is subject
to the satisfaction of several closing conditions, including obtaining
financing for the transactions and the new company. There can be no
assurance that all conditions to completion of the transaction will be
met.
About AmerisourceBergen
AmerisourceBergen (NYSE:ABC) is one of the world's largest
pharmaceutical services companies serving the United States and
Canada. Servicing both pharmaceutical manufacturers and healthcare
providers in the pharmaceutical supply channel, the Company provides
drug distribution and related services designed to reduce costs and
improve patient outcomes. AmerisourceBergen's service solutions range
from pharmacy automation and pharmaceutical packaging to pharmacy
services for skilled nursing and assisted living facilities,
reimbursement and pharmaceutical consulting services, and physician
education. With nearly $60 billion in annualized revenues,
AmerisourceBergen is headquartered in Valley Forge, PA, and employs
more than 13,000 people. AmerisourceBergen is ranked #27 on the
Fortune 500 list. For more information, go to
www.amerisourcebergen.com.
About Kindred Healthcare
Kindred Healthcare, Inc. (NYSE:KND), is a Fortune 500 healthcare
services company, based in Louisville, Kentucky, with annualized
revenues of $4.3 billion that provides services in over 500 locations
in 39 states. Kindred through its subsidiaries operates long-term
acute care hospitals, skilled nursing centers, institutional
pharmacies and a contract rehabilitation services business,
Peoplefirst Rehabilitation Services, across the United States.
Kindred's 56,000 employees are committed to providing high quality
patient care and outstanding customer service to become the most
trusted and respected provider of healthcare services in every
community we serve. For more information, go to
www.kindredhealthcare.com
AmerisourceBergen Forward-Looking Statements
This news release may contain 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 management's views with respect to future financial and
operating results and the benefits, efficiencies and savings to be
derived from the Company's integration plan to consolidate its
distribution network. The following factors, among others, could cause
actual results to differ materially from those described in any
forward-looking statements: competitive pressures; the loss of one or
more key customer or supplier relationships; customer defaults or
insolvencies; changes in customer mix; supplier defaults or
insolvencies; changes in pharmaceutical manufacturers' pricing and
distribution policies or practices; adverse resolution of any contract
or other disputes with customers (including departments and agencies
of the U.S. Government) or suppliers; regulatory changes; changes in
U.S. government policies (including reimbursement changes arising from
the Medicare Modernization Act); declines in the amounts of market
share rebates offered by pharmaceutical manufacturers to the
PharMerica long-term care business, declines in the amounts of rebates
that the PharMerica Long-Term Care business can retain, and/or the
inability of the business to offset the rebate reductions that have
already occurred or any rebate reductions that may occur in the
future; any disruption to or other adverse effects upon the PharMerica
Long-Term Care business caused by the announcement of the Company's
agreement to combine the PharMerica Long-Term Care business with the
institutional pharmacy business of Kindred Healthcare, Inc. into a new
public company that will be owned 50% by the Company's shareholders
(the "PharMerica LTC Transaction"); the inability of the Company to
successfully complete the PharMerica LTC Transaction; fluctuations in
market interest rates; operational or control issues arising from the
Company's outsourcing of information technology activities; the
Pharmaceutical Distribution segment's ability to continue to
successfully transition its business model to fee-for-service; success
of integration, restructuring or systems initiatives; fluctuations in
the U.S. dollar - Canadian dollar exchange rate and other foreign
exchange rates; economic, business, competitive and/or regulatory
developments in Canada, the United Kingdom and elsewhere outside of
the United States; acquisition of businesses that do not perform as we
expect or that are difficult for us to integrate or control; and other
economic, business, competitive, legal, regulatory and/or operational
factors affecting the business of the Company generally. Certain
additional factors that management believes could cause actual
outcomes and results to differ materially from those described in
forward-looking statements are set forth (i) in Item 1 (Business)
under the heading "Certain Risk Factors" in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 2005 and
elsewhere in that report and (ii) in other reports filed by the
Company pursuant to the Securities Exchange Act of 1934.
Kindred Healthcare Forward-Looking Statements
This press release includes 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. All statements regarding
Kindred's expected future financial position, results of operations,
cash flows, financing plans, business strategy, budgets, capital
expenditures, competitive positions, growth opportunities, plans and
objectives of management and statements containing the words such as
"anticipate," "approximate," "believe," "plan," "estimate," "expect,"
"project," "could," "should," "will," "intend," "may" and other
similar expressions, are forward-looking statements. Statements in
this press release concerning the new company's business outlook or
future economic performance, anticipated profitability, revenues,
expenses or other financial items, anticipated cost synergies,
economies of scale and product or service line growth, together with
other statements that are not historical facts, are forward-looking
statements reflecting the best judgment of Kindred based upon
currently available information.
Such forward-looking statements are inherently uncertain, and
stockholders and other potential investors must recognize that actual
results may differ materially from Kindred's expectations as a result
of a variety of factors, including, without limitation, those
discussed below. Such forward-looking statements are based upon
management's current expectations and include known and unknown risks,
uncertainties and other factors, many of which Kindred is unable to
predict or control, that may cause Kindred's actual results or
performance to differ materially from any future results or
performance expressed or implied by such forward-looking statements.
These statements involve risks, uncertainties and other factors
discussed below and detailed from time to time in Kindred's filings
with the Securities and Exchange Commission.
In addition to the factors set forth above, other factors that may
affect Kindred's plans or results include, without limitation, (a)
Kindred's and AmerisourceBergen's ability to complete the proposed
merger of their respective institutional pharmacy operations,
including the receipt of required regulatory approvals and the
satisfaction of other closing conditions to the proposed transaction;
(b) Kindred's ability to operate pursuant to the terms of its debt
obligations and its master leases with Ventas, Inc. (NYSE:VTR); (c)
Kindred's ability to meet its rental and debt service obligations; (d)
adverse developments with respect to Kindred's results of operations
or liquidity; (e) Kindred's ability to attract and retain key
executives and other healthcare personnel; (f) increased operating
costs due to shortages in qualified nurses, therapists and other
healthcare personnel; (g) the effects of healthcare reform and
government regulations, interpretation of regulations and changes in
the nature and enforcement of regulations governing the healthcare
industry; (h) changes in the reimbursement rates or methods of payment
from third party payors, including the Medicare and Medicaid programs,
changes arising from and related to the Medicare prospective payment
system for long-term acute care hospitals, including the final
Medicare payment rules issued in May 2006, the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003, and changes in
Medicare and Medicaid reimbursements for Kindred's nursing centers;
(i) national and regional economic conditions, including their effect
on the availability and cost of labor, materials and other services;
(j) Kindred's ability to control costs, particularly labor and
employee benefit costs; (k) Kindred's ability to successfully pursue
its development activities and successfully integrate new operations,
including the realization of anticipated revenues, economies of scale,
cost savings and productivity gains associated with such operations;
(l) the increase in the costs of defending and insuring against
alleged professional liability claims and Kindred's ability to predict
the estimated costs related to such claims; (m) Kindred's ability to
successfully reduce (by divestiture of operations or otherwise) its
exposure to professional liability claims; (n) Kindred's ability to
successfully dispose of unprofitable facilities; and (o) Kindred's
ability to ensure and maintain an effective system of internal
controls over financial reporting. Many of these factors are beyond
Kindred's control. Kindred cautions investors that any forward-looking
statements made by Kindred are not guarantees of future performance.
Kindred disclaims any obligation to update any such factors or to
announce publicly the results of any revisions to any of the
forward-looking statements to reflect future events or developments.
CONTACT: AmerisourceBergen Corporation
Michael N. Kilpatric, 610-727-7118
or
Kindred Healthcare, Inc.
Susan E. Moss, 502-596-7296
SOURCE: AmerisourceBergen Corporation