McKesson Corporation has reached a definitive agreement with Apollo Funds for the sale of a minority ownership interest in its Medical-Surgical Solutions (MMS) business. Apollo Funds will invest $1.25 billion in convertible preferred equity, acquiring approximately 13% of MMS. This transaction values the MMS business at approximately $13 billion in total enterprise valuation. McKesson will maintain operating control and majority ownership of MMS, continuing to consolidate its financial results.
This move is a significant step in McKesson's broader strategy to separate MMS, which supplies medical products, equipment, and supply chain services to non-hospital care settings, in anticipation of a planned initial public offering. While the implied valuation might seem slightly dilutive, analysts like Elizabeth Anderson from Evercore and Michael Cherny from Leerink Partners view the transaction positively from a strategic perspective, noting that it helps reduce uncertainty surrounding MMS's standalone valuation.
McKesson CEO Brian Tyler stated that Apollo's experience in complex carve-out and public market transactions will be beneficial as MMS prepares for success as a standalone company. Apollo's partners, Maxwell David and Jeff Armstrong, commented that MMS is a leading healthcare platform with strong market positioning and is well-prepared for continued growth. The transaction is subject to regulatory approvals and customary closing conditions, and McKesson has not yet provided a timeline for the planned stock-market listing.
