McKesson to buy UDG drug distribution business

Healthcare services provider UDG said on Friday that it is to sell its Irish pharmaceutical distribution businesses to global pharmaceutical wholesaler McKesson in a €407.5 million deal.The divestment will transform UDG into a more focused international healthcare services business as it announces new management.

The sale to McKesson, which owns owns the LloydsPharmacy chain in Ireland, includes United Drug Supply Chain Services business, United Drug Sangers business, TCP Group, as well as UDG's UK based travel healthcare business MASTAUDG Healthcare. McKesson's acquisition follows last year's takeover of Celesio and will strengthen its position in Ireland, where it already employs 1,000 people.

UDG said it will use the proceeds to pay down debt and provide “significant firepower” to support UDG Healthcare’s ambitious growth plans, through strategic M&A complementary to the group’s existing market leading, high-growth businesses and to address any scale and geographic gaps.

The sale will leave the company “extremely well positioned to develop and strengthen existing market leading positions in Ashfield, Aquilant and Sharp, and to capitalise on the increased demand for their services” UDG said.

UDG also announced the retirement of CEO Liam Fitzgerald on March 31st 2016. After 23 years with the company, Mr Fitzgerald will step down but remain as a consultant and director until September 30th 2016. He will be replaced by Brendan McAtamney, who joined UDG as chief operating officer (COO) in 2013.

“It has been my privilege to lead this company for 15 exciting years,” said Mr FitzGerald, “and I believe now is the right time for new leadership to take the Company forward. Since 2000 we have been on a journey to transform the Group and move into new higher-growth outsourced pharmaceutical service areas and geographies. Today’s announcement marks the completion of that transformation, albeit subject to shareholder approval. It’s a good time to pass of the baton to Brendan, and to move to a different phase in my career”.

The deal is expected to close by end March 2016.