UDG Healthcare to Sell Two Units to McKesson

LONDON—Dublin-based UDG Healthcare PLC agreed to sell two of its units to U.S. drug wholesaler McKesson Corp. for €407.5 million ($466 million).

The health care services provider said Friday it will sell its Irish pharmaceutical distribution businesses and its U.K.-based travel health care business to focus on its higher-growth, higher-margin international health care services businesses.

"The overall value of the pharmaceutical market in the Republic of Ireland has been in decline for a number of years…consequently we are delighted that McKesson made an attractive offer for our business," UDG Chief Executive Liam FitzGerald told reporters on a conference call.

UDG Healthcare will use the proceeds from the disposals to repay debt and invest in growth, both organic and via acquisitions. The company said it would mainly look for M&A opportunities in the U.S., followed by Europe and Japan.

UDG Healthcare also said Mr. FitzGerald would retire in March after 23 years with company. He will be succeeded by Chief Operating Officer Brendan McAtamney.

For San Francisco-based McKesson, the deal represents the latest move to expand its European presence. The company earlier this year struck a deal to buy 281 Sainsbury's pharmacies in the U.K., which will be added to its Lloyds Pharmacy brand. McKesson expects both deals to close in the first half of next year, and expects the businesses to add 10 to 14 cents to its adjusted per-share earnings.

In its latest quarter, ended in June, McKesson's international pharmaceutical business made up just over 10% of its overall revenue. Revenue in the segment fell 17% but was flat excluding currency impacts.

UDG shares rose 5.7% to 521 pence. Shares of McKesson, up 4.4% in the past year, were inactive in U.S. premarket trading.

Write to Jana Simmons at [e-mail]

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September 18, 2015 08:45 ET (12:45 GMT)

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