Cardinal Health looks to buy pharma distributor for $1.3B

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Cardinal Health is planning to acquire Kinray, a pharmaceutical distributor, for $1.3 billion in an all-cash transaction that will expand its ability to serve retail independent pharmacies in the northeastern U.S.

"Adding Kinray to the Cardinal Health Pharmaceutical Segment portfolio will enable us to build on our increasing presence in community pharmacy," said George Barrett, chairman and CEO of Cardinal.

When the transaction is complete, Kinray customers will be able to tap into Cardinal’s line of service offerings, including its Source Generics program and additional tools for the back office of retail pharmacies, including inventory management tools, reimbursement services, managed care contracting services, specialized care centers and local store marketing programs.

With annual sales in excess of $3.5 billion, Kinray currently serves approximately 2,000 retail independent pharmacy customers as a distributor of both branded and generic pharmaceuticals, according to the Dublin, Ohio-based company. Kinray primarily serves the N.Y. metropolitan area and will establish a broader platform for Cardinal in the northeastern U.S. Cardinal added that the addition of Kinray will also grow Cardinal's customer mix by increasing the company's retail independent pharmacy base by 40 percent to approximately 7,000 total customers.

Subject to customary closing conditions and regulatory approvals, Cardinal plans to complete the transaction by the end of the calendar year or early in 2011. The company predicts the transaction to be neutral to slightly accretive to non-GAAP earnings in fiscal 2011, depending on the timing of the closing.