McKesson is buying half of Option Care now, with the right to buy the rest later

Option Care Health rose 32.65% to US$31.00 on Tuesday. Private equity firm Clayton Dubilier & Rice and drug distributor McKesson agreed to buy it for US$32.05 a share in cash, 37.1% above Monday's close. With debt, the deal is worth about US$5.8 billion.

Option Care gives patients their drips at home. It is America's largest independent infusion provider, delivering drugs straight into a vein at home or in its own clinics rather than in a hospital. It treats more than 308,000 patients a year from over 197 locations.

The ownership is the unusual part. CD&R takes 51%, and McKesson puts in about US$1.4 billion for the other 49%. McKesson also gets the right to buy CD&R's stake later, subject to conditions and the regulators.

Chart: Option Care's buyers offer US$32.05 a share. Closing share price at each year end from 2022, then before and after Tuesday's bid, in US$. The dashed line is the cash offer; the 2023 close sat above it. — This story’s chart of the day.

JPMorgan analyst Lisa Gill said the deal suits McKesson's focus on specialty drugs and care outside hospitals. Chief executive John Rademacher called it "a great outcome" for shareholders. The deal is due to close in the first half of 2027.

The tell

whether McKesson takes up that option. Owning half a business shows a buyer how it really runs before it pays for the rest. A buyout of CD&R within a few years would be McKesson's verdict on the business.

This story ran in Fission and Chips Wednesday 7 October’s edition, with the market snapshot, the other two stories, the numbers and the week ahead. Read the whole edition →

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