McKesson has reached an agreement to sell its UK businesses to AURELIUS, a pan-European asset management group.
The £477m deal includes the sale of LloydsPharmacy, LloydsDirect, AAH Pharmaceuticals, LloydsPharmacy Clinical Homecare, LloydsPharmacy Online Doctor, MASTA, and John Bell & Croyden.
The agreement follows McKesson’s recently announced sale of other businesses in Europe as part of moves by the US firm to streamline its operations and fully exit the European region.
The UK sell-off is expected to close in 2022, subject to conditions, including receipt of required regulatory approvals.
Brian Tyler, Chief Executive of McKesson, said: “As we explore strategic options to fully exit Europe, this transaction provides our UK operation with the best path forward to achieve its long-term growth potential, while allowing McKesson to focus future investments in strategic growth areas outside of Europe.”
AURELIUS has pledged to support the development of McKesson UK by further investing in each of its business divisions.
Dr. Dirk Markus, founding partner of AURELIUS, said: “Our agreement with McKesson builds on AURELIUS’ proven track record as a trusted investor in corporate carve-outs, leveraging its operational expertise to grow portfolio companies.
“I look forward to the support of McKesson UK from our management and our operational teams, who will accompany McKesson’s path into the future with their expertise and know-how.”
Tristan Nagler, a partner at AURELIUS partner, added: “We see considerable potential in all four segments of McKesson UK to further expand and improve the business. We will also be able to achieve additional customer benefits through additional investments – for example through digitization measures and measures to further improve service quality and reliability for patients and communities that McKesson UK serves.”
McKesson UK generated sales of over £5bn last year in the healthcare sector. However, its 1,400-strong LloydsPharmacy chain has struggled in recent years with the tough conditions in the sector. The retailer’s most recent accounts for the year to 31 March 2020 show its turnover fell 1.6% to £1.95bn with an operating loss of £118.4m as it continued with a turnaround programme.
LloydsPharmacy has closed hundreds of outlets in recent years, blaming government funding cuts and higher operating costs. At the end of 2020, it called for health centre landlords to recognise the impact of reduced footfall during the pandemic and renegotiate unsustainable rents or risk further closures of unviable pharmacies.
NAM Implications:
- Aurelius is ‘focused on creating value through the operational improvement of companies with development potential’
- ‘for example through digitization measures and measures to further improve service quality and reliability for patients and communities that McKesson UK serves’
- In other words, during 2022, LloydsPharmacy, LloydsDirect, AAH Pharmaceuticals, LloydsPharmacy Clinical Homecare, LloydsPharmacy Online Doctor, MASTA, and John Bell & Croyden, will undergo a fundamental review…
- …in order to optimise/sell appropriate assets.
- Two impacts for NAMs:
- Dealing with the companies will mean optimising financial performance (expertise in calculating cost and demonstrating value to the customer.
- Anticipating possible prices & terms disparities re sell-off companies.
- Meanwhile, don’t forget Amazon’s probable moves into these specific markets…
