Cleary Gottlieb is advising long-time client Kindred Healthcare in its efforts to combine its institutional pharmacy business, Kindred Pharmacy Services, with PharMerica Long-Term Care, the institutional pharmacy business of AmerisourceBergen Corporation, as a new publicly traded company that would be the second largest in the institutional pharmacy services market, with expected revenues of approximately $1.9 billion.
Kindred and AmerisourceBergen publicly announced the signing of a non-binding Letter of Intent on Monday, August 7, 2006. They expect to sign a definitive agreement on or about September 30, 2006, and anticipate completion of the transaction in the first quarter of 2007.
The combined company will arise from a merger that immediately follows simultaneous, tax-free spin-offs by Kindred and AmerisourceBergen. The shareholders of AmerisourceBergen and Kindred will each hold 50 percent the combined company’s shares. In addition, PharMerica and Kindred Pharmacy Services will each borrow approximately $150 million and distribute it to their respective parents immediately before the spin-offs. The new company will assume the $300 million in debt.