Health care services and information provider McKesson is combining most of its technology solutions arm with IT specialist Change Healthcare to form a new business with $3.4 billion in annual revenue, the companies said in a joint statement Tuesday.
"The new company will establish a more efficient suite of end-to-end payment and claims solutions, as well as clinical capabilities, while unlocking the value of our (Technology Solutions) businesses in a tax-efficient manner," said McKesson Chief Executive John H. Hammergren.
McKesson and Change will split ownership of the new company 70%-30%, respectively. Hammergren will be chairman and Neil de Crescenzo will serve as CEO of the newly formed company, which will be jointly governed by McKesson and Change Healthcare.
The deal is seen closing in the first half of calendar 2017. The new company has commitments for $6.1 billion of transaction-related funded debt, said McKesson and Change in the statement. About $2.7 billion will pay for existing Change debt, while McKesson and Change stockholders will receive $1.25 billion and $1.75 billion in cash payments, respectively.
Meanwhile, McKesson said separately that it is exploring strategic alternatives for its enterprise information solutions business, which is part of its technology solutions business that is not merging with Change.
McKesson shares closed up 2.3% on the stock market today. Peers Cardinal Health (CAH) rose 2.4%, and Amerisourcebergen (ABC) added 2%.
