CHICAGO (Reuters) - Walgreen Co. WAG.N on Monday said it plans to buy Option Care Inc. (OPTN.O), a provider of home infusion pharmacy services, for $760.5 million plus the assumption of some debt, marking its latest expansion into patient care.
Shares of Option Care rose about 25 percent but still traded below the offer price of $19.50 per share.
Walgreen, one of the largest U.S. drugstore chains, has typically grown on its own rather than through acquisitions, but has been acquiring assets to expand its lineup of health-related services. Walgreen’s latest move comes months after its main rival, CVS, became the largest provider of specialty pharmacy services with its acquisition of Caremark.
Walgreen expects the acquisition to close in a few months and add “slightly” to earnings in the first year and more in future years, Chief Financial Officer William Rudolphsen said during a conference call. He also said Walgreen anticipates pretax synergies of about $15 million in the first year.
Walgreen said that once the acquisition is completed, it will rank as the fourth-largest U.S. specialty pharmacy business behind CVS/Caremark Corp. (CVS.N), Medco Health Solutions Inc. MHS.N and Express Scripts Inc. ESRX.O.
The deal between the two suburban Chicago companies follows Walgreen’s purchases of Take Care Health Systems, an operator of in-store health clinics, Medmark Specialty Pharmacy Solutions, SeniorMed Pharmacy and Schraft’s, a specialty pharmacy focused on fertility medications and services.
Option Care’s board unanimously approved the deal. John Kapoor, Option Care’s founder, and trusts established by him, which together own about 22 percent of the outstanding Option Care shares, committed to tender their shares.
Walgreen said it would pay $19.50 in cash for 34.5 million outstanding Option Care shares and 4.5 million in option equivalent shares, or a total of $760.5 million, plus the assumption of about $86 million in debt.
Option Care provides home infusion services and other specialty care for more than 40,000 patients from over 100 pharmacies in 34 states.
Walgreen’s existing home care business, Walgreens Home Care, operates 45 facilities in 18 states and Walgreens Specialty Pharmacy operates six locations.
Shares of Option Care were up $3.85, or 25 percent, at $19.25 after rising to $19.30 in heavy Nasdaq trading. Shares of Walgreen were up 15 cents at $43.69 after rising to $43.92 on the New York Stock Exchange.
Peter J. Solomon Co. acted as Walgreen’s financial advisor and Wachtell, Lipton, Rosen & Katz served as its legal counsel. UBS Investment Bank served as Option Care’s financial advisor, while Bryan Cave LLP served as its legal counsel.
Reporting by Jessica Wohl, with reporting by Shailesh Kuber in Bangalore