McKesson let go of a minority share of its medical/surgical solutions division for $1.25 billion to Apollo Funds as part of the healthcare service giant’s plan to take the unit public next year.
Under terms of the deal, Apollo gets about a 13% minority interest in the MMS division that estimates the value of the unit at roughly $13 billion, the company said in an April 20 press release.
The company keeps operating control and majority ownership of MMS and consolidate the results for financial reporting. The closing is subject to regulatory approvals and customary closing conditions.
“This transaction marks a key milestone in McKesson’s planned separation of MMS,” Brian Tyler, McKesson’s chief executive, said in the release. “Apollo’s experience in supporting complex carve-out and public market transactions will be additive as we position MMS for success, while maintaining McKesson’s financial and strategic flexibility.”
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McKesson announced last May that it intended to spin-off the unit through an IPO. At the time of the announcement, the company said the division represented only 3.2% of total corporate revenue.
A shift in demand, lower volumes, supply chain disruptions and a post-pandemic environment resulted in sluggish growth at MMS since 2020.
“We believe the business is well positioned for continued growth, and that Apollo’s Hybrid platform enables us to provide flexible, scaled capital to support the next phase of development as MMS prepares to operate as a standalone company,” Apollo partner Maxwell David and Jeff Armstrong, managing director, said in the release.
