Aurelius buys McKesson UK in GBP 477m deal

Harriet Matthews
02 November 2021

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Aurelius has acquired McKesson UK in a GBP 477m carve-out from its parent company, US-headquartered healthcare and IT company McKesson.

The carve-out is Aurelius's largest deal to date, the GP said in a statement.

McKesson UK comprises Lloyds Pharmacy, LloydsDirect (previously Echo by LloydsPharmacy), LloydsPharmacy Clinical Homecare, LloydsPharmacy Online Doctor, travel vaccinations specialist Masta, London-based pharmacy John Bell & Croyden, and wholesale pharmaceuticals distributor AAH Pharmaceuticals.

McKesson divested its operations in France, Italy, Ireland, Portugal, Belgium and Slovenia to Germany-based pharmaceuticals wholesaler Phoenix Group in July 2021 as part of its strategy to fully exit Europe.

The company originally acquired LloydsPharmacy in 2014 as part of its GBP 5bn acquisition of Germany-based pharmaceutical wholesaler and retailer Celesio.

McKesson mandated Barclays to explore the sale of LloydsPharmacy in February 2021, according to Sky News, although the report noted that it remained unclear whether McKesson's full UK operations would be part of the sale. Sky News reported in July 2021 that the sale process had drawn interest from Aurelius, HIG Europe and Epiris.

Aurelius European Opportunities Fund IV is to own a 70% stake in the company, while the firm's listed Aurelius Equity Opportunities structure will hold a 30% stake.

Aurelius IV is the firm's debut fund for external institutional investors, as reported. The vehicle held a final close in April 2021 on EUR 360m. The fund generally deploys equity tickets of EUR 15m-50m, but has an additional EUR 150m co-investment capacity from the GP's listed entity. The GP said in a statement that the fund now has an investment capacity of more than EUR 500m.

According to the same statement, Aurelius intends to support McKesson with the further development of all four of its operational segments: retail, digital, homecare and wholesale.

The deal is expected to close in Q1 2022.

Company
McKesson's UK-based operations comprise several retail, digital, homecare and wholesale pharmaceutical businesses. Lloyds Pharmacy provides online and in-person pharmaceutical products and services, while AAH Pharmaceuticals is a pharmaceutical wholesaler. The company has 18,000 staff and posted GBP 5bn in revenues in 2020, alongside EBITDA of almost GBP 100m. McKesson UK's operations are headquartered in Coventry.

People
Aurelius – Dirk Markus (founding partner); Tristan Nagler (partner).
McKesson – Brian Tyler (CEO).

Advisers
Equity – Rothschild & Co (corporate finance); PwC (financial due diligence); FRP (financial due diligence), Interpath (tax), Mayer Brown (legal); DLA Piper (legal); Cardano (pensions due diligence); Kearney (IT due diligence); Mansfield (commercial due diligence).