Filed by: Bergen Brunswig Corporation. This
Communication is filed pursuant to Rule 425
under The Securities Act of 1933, as amended,
and deemed filed pursuant to Rule 14a-12 of
the Securities Exchange Act of 1934.
Subject Company: Bergen Brunswig Corporation
Commission File Number: 1-5110
FORWARD-LOOKING STATEMENTS
The following communications contain certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are based on management's
current expectations and are subject to uncertainty and changes in
circumstances. Actual results may vary materially from the expectations
contained in the forward-looking statements. The forward-looking statements
herein include statements addressing future financial and operating results of
AmeriSource and Bergen Brunswig and the timing, benefits and other aspects of
the proposed merger.
The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: inability to
obtain, or meet conditions imposed for, governmental approvals for the
transaction; failure of the stockholders of AmeriSource and Bergen Brunswig to
approve the merger; the risk that the businesses of AmeriSource and Bergen
Brunswig will not be integrated successfully; failure to obtain and retain
expected synergies; and other economic, business, competitive and/or regulatory
factors affecting the businesses of AmeriSource and Bergen Brunswig generally.
More detailed information about these factors is set forth in AmeriSource's and
Bergen Brunswig's filings with the Securities and Exchange Commission, including
each of their Annual Reports on Form 10-K for fiscal 2000 and their most recent
quarterly reports on Form 10-Q. AmeriSource and Bergen Brunswig are under no
obligation to (and expressly disclaim any such obligation to) update or alter
their forward-looking statements whether as a result of new information, future
events or otherwise.
ADDITIONAL INFORMATION
In connection with their proposed merger, AmeriSource and Bergen Brunswig will
file a joint proxy statement/prospectus with the Securities and Exchange
Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus (when available) and other documents filed
by AmeriSource and Bergen Brunswig at the Securities and Exchange Commission's
web site at www.sec.gov. The joint proxy statement/prospectus and such other
documents may also be obtained for free from AmeriSource or from Bergen Brunswig
by directing such request to AmeriSource Health Corporation, General Counsel,
1300 Morris Drive, Suite 100, Chesterbrook, Pennsylvania 19087-5594, Telephone:
(610) 727-7000; or to Bergen Brunswig Corporation, Attention: Corporate
Secretary, 4000 Metropolitan Drive, Orange, California 92868-3510, Telephone:
(714) 385-4000.
PARTICIPANTS IN SOLICITATION
AmeriSource and Bergen Brunswig and their respective directors, executive
officers and other members of their management and employees may be deemed to be
participants in the solicitation of proxies from their respective stockholders
in connection with the proposed merger. Information concerning AmeriSource's
participants in the solicitation is set forth in AmeriSource's Current Report on
Form 8-K filed with the Securities and Exchange Commission on March 19, 2001,
and information concerning Bergen Brunswig's participants in the solicitation is
set forth in Bergen Brunswig's Current Report on Form 8-K filed with the
Securities and Exchange Commission on March 19, 2001.
********
AmeriSource Bergen Brunswig Corporation
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
Contact: Michael N. Kilpatric Donna Dolan
610/727-7118 714/385-4226
mkilpatric@amerisource.com donna.dolan@bergenbrunswig.com
-------------------------- ------------------------------
FOR IMMEDIATE RELEASE
AMERISOURCE AND BERGEN BRUNSWIG TO COMBINE,
CREATING A $35 BILLION HEALTHCARE SERVICES COMPANY
-- Merger of Equals to Deliver Expanded Growth,
Enhanced Customer Offerings and Synergies Of More Than $125 Million --
VALLEY FORGE, PA, and ORANGE, CA, March 19, 2001 - AmeriSource Health
Corporation (NYSE:AAS) and Bergen Brunswig Corporation (NYSE: BBC) today
announced that the two companies have agreed to combine in a $7 billion merger
of equals.
The stock-for-stock transaction will create a new company, called
AmeriSource-Bergen Corporation, with approximately $35 billion in annual
operating revenue. As a combined company, AmeriSource-Bergen expects to generate
enhanced growth, achieve annual operating synergies of more than $125 million by
the end of the third year and produce substantial benefits for customers and
employees. The new company will have its headquarters in Valley Forge,
Pennsylvania, and its west coast management center will be located in Orange,
CA.
Under the terms of the agreement, which has been unanimously approved by
both Boards of Directors, each share of Bergen Brunswig common stock will be
converted into 0.37 share of AmeriSource-Bergen common stock while each share of
AmeriSource common stock will be converted into one share of AmeriSource-Bergen
common stock. The transaction will be tax free to shareholders of both
companies. The new company will have approximately 103 million shares
outstanding, with current AmeriSource shareholders owning
2
approximately 51% of the combined company and current Bergen Brunswig
shareholders owning about 49%. Based on closing stock prices on March 16, 2001,
the new company will have a pro forma market capitalization of approximately $5
billion and approximately $2 billion of debt. The transaction is expected to be
accounted for as a purchase transaction under new guidelines for business
combinations proposed by the Financial Accounting Standards Board (FASB).
Upon closing, under the proposed FASB purchase accounting rules, the
transaction is expected to be non-dilutive, before synergies and special items.
The combination is expected to close during the summer of 2001. The transaction
is subject to Hart-Scott-Rodino review, approval by shareholders of AmeriSource
and Bergen Brunswig, confirmation of the new FASB purchase accounting rules, and
other customary closing conditions.
Strategic Rationale
"Bringing together AmeriSource and Bergen makes great sense strategically,
financially, operationally and culturally. Our two companies have significant
complementary strengths that will allow us to deliver enhanced benefits for
shareholders, customers, suppliers and employees," said Robert E. Martini,
Chairman and Chief Executive Officer of Bergen Brunswig, who will become
Chairman of the new company. "This is a combination of equals. But more than
that, both companies understand the pharmaceutical distribution business and
have corporate cultures that are admired for their focus on quality, efficiency
and customer satisfaction.
"We also feel that PharMerica's long-term-care pharmacies and its workers'
compensation business as well as ASD's specialty healthcare offerings of
oncology, vaccines and biotech products, which are a part of Bergen's portfolio
of businesses, will enhance AmeriSource-Bergen's position in healthcare services
by providing greater depth of product offerings."
R. David Yost, Chairman and Chief Executive Officer of AmeriSource, who
will become Chief Executive Officer and President of AmeriSource-Bergen,
3
said, "As independent companies, AmeriSource and Bergen each have tremendous
strengths and excellent growth opportunities. Together, we will have an enhanced
ability to grow and create new offerings and innovative programs to further meet
our customers' growth needs. This is a true combination of equals and our
approach to the integration will be to select the best people, programs and
operations from each company. With the synergy of our complementary programs and
resources, this combination benefits the customers of both companies. In
addition, it enhances our confidence that we can sustain a long-term earnings
per share growth rate of 20 percent and continue to create significant
shareholder value."
AmeriSource and Bergen match up well in geography and customer groups.
While both companies operate nationally, AmeriSource has a larger presence in
the Eastern U.S., and Bergen's distribution business has a larger presence in
the West. The companies have complementary independent retail pharmacy programs.
Both companies supply health systems customers which will benefit from the
addition of Bergen's alternate site business. Also, AmeriSource's American
Health Packaging unit will provide added benefits to Bergen's PharMerica and
drug distribution operations. Throughout all their operations AmeriSource and
Bergen Brunswig share a common culture of providing outstanding service and
making customer satisfaction paramount.
Management
The senior management of AmeriSource-Bergen will also include Kurt J.
Hilzinger, the President and Chief Operating Officer of AmeriSource, who will
become Executive Vice President and Chief Operating Officer of the combined
company, and Neil F. Dimick, Bergen's current Chief Financial Officer, who will
become Executive Vice President and Chief Financial Officer of the new Company.
The new Company structure also includes an Executive Management Committee.
Led by CEO Yost, the AmeriSource-Bergen committee will include Hilzinger and
Dimick as well as three Senior Vice Presidents. They are Brent R.
4
Martini, currently President of the drug distribution business at Bergen, who
will become President of AmeriSource-Bergen Drug Company; Charles J. Carpenter
who will continue as President of PharMerica, now a Bergen subsidiary; and
Steven H. Collis, currently President of Bergen's ASD Specialty Healthcare, Inc,
who will continue to head the unit under AmeriSource-Bergen.
The Board of Directors of the new Company will have ten members. In
addition to Martini and Yost, there will be a total of eight independent
directors, with three each from AmeriSource and Bergen Brunswig. Also,
AmeriSource-Bergen will nominate two additional unaffiliated directors.
Synergies
The companies expect to achieve more than $125 million in annual operating
savings by the end of the third year after the transaction closes.
"Our combination will result in fewer, but larger and more efficient
distribution centers, consolidation of our corporate staffs, efficiencies in
purchasing, lower-cost financing, and very significantly enhanced customer
offerings and programs," said Yost. "Pharmaceutical distribution represents one
of the very few segments in healthcare that has met the challenge of reducing
costs steadily and consistently over time, and this combination will accelerate
that trend. Both companies have previously demonstrated the ability to take
costs out of merged operations. The experience of the combined management teams
in integrating pharmaceutical distribution businesses gives us confidence that
this melding of companies will be smooth and productive, constantly meeting or
exceeding customers' expectations for exceptional service."
Mr. Yost continued, "While achieving operational efficiencies is essential,
we also see enhanced growth opportunities by creating new customer programs and
expanding our offering of value-added services. These programs, which streamline
the supply chain in a way that improves overall efficiency, are beneficial to us
as well as to our customers."
5
Yost concluded, "Our new company will operate a more effective and
efficient healthcare services business, one that will emerge as the leader in
our growing industry."
Under the proposed new business combination accounting guidelines, the
companies anticipate that there will be approximately $10 million in annual
expenses related to purchase accounting adjustments. These adjustments will be
more than offset by the elimination of $23 million per year of goodwill
amortization for the combined company.
AmeriSource was represented by Goldman, Sachs & Co. and Bergen Brunswig was
represented by Merrill Lynch & Co.
Webcast Conference Call
AmeriSource and Bergen will host a conference call this morning at 10:30
a.m. Eastern Standard Time to discuss the merger. The conference call will be
simultaneously broadcast live over the Internet. Listeners may access the
conference call live and archived over the Internet at
http://www.amerisource.com. Please allow 15 minutes prior to the call to visit
the sites and download and install any necessary audio software.
In addition, the companies will host an investor presentation at 1:30 p.m.
Eastern Standard Time in New York. The presentation will be broadcast live over
the Internet. Listeners may access the presentation live and archived over the
Internet at www.amerisource.com. Please allow 15 minutes prior to the start of
the presentation to visit the sites and download and install any necessary audio
and video software.
About AmeriSource
AmeriSource Health Corporation, with more than $13 billion in annualized
operating revenue, is a leading distributor of pharmaceutical and related
healthcare products and services, and the industry's largest provider of
pharmaceuticals to acute care/health systems customers. Headquartered in Valley
Forge, PA, the Company serves its base of about 15,000 customer
6
accounts through a national network of 22 strategically located drug
distribution facilities. For news and additional information about the company,
visit its web site at www.amerisource.com.
About Bergen Brunswig
Bergen Brunswig Corporation, headquartered in Orange County, California, is
a leading supplier of pharmaceuticals and specialty healthcare products as well
as information management solutions and consulting services. With $22 billion in
annualized operating revenues, Bergen's customers include the nation's
healthcare providers (hospitals, nursing homes, physicians), drug stores,
manufacturers and patients. Through its Drug Company's 30 distribution centers
and its other subsidiary companies, Bergen provides product distribution,
logistics, pharmacy management programs, and Internet fulfillment strategies
designed to reduce costs and improve patient outcomes across the entire
healthcare spectrum. Bergen Brunswig press releases are available on the
Company's website at www.bergenbrunswig.com.
Forward-Looking Statements
The foregoing communication contains certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are based on management's
current expectations and are subject to uncertainty and changes in
circumstances. Actual results may vary materially from the expectations
contained in the forward-looking statements. The forward-looking statements
herein include statements addressing future financial and operating results of
AmeriSource and Bergen Brunswig and the timing, benefits and other aspects of
the proposed merger.
The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: inability to
obtain, or meet conditions imposed for, governmental approvals for the
transaction; failure of the stockholders of AmeriSource and Bergen Brunswig to
approve the merger; the risk that the businesses of AmeriSource and Bergen
Brunswig will not be integrated successfully; failure to obtain and retain
expected synergies; and other economic, business, competitive and/or regulatory
factors affecting the businesses of AmeriSource and Bergen Brunswig generally.
More detailed information about these factors is set forth in AmeriSource's and
Bergen Brunswig's filings with the Securities and Exchange Commission, including
each
7
of their Annual Reports on Form 10-K for fiscal 2000 and their most recent
quarterly reports on Form 10-Q. AmeriSource and Bergen Brunswig are under no
obligation to (and expressly disclaim any such obligation to) update or alter
their forward-looking statements whether as a result of new information, future
events or otherwise.
Additional Information
In connection with their proposed merger, AmeriSource and Bergen Brunswig will
file a joint proxy statement/prospectus with the Securities and Exchange
Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus (when available) and other documents filed
by AmeriSource and Bergen Brunswig at the Securities and Exchange Commission's
web site at www.sec.gov. The joint proxy statement/prospectus and such other
documents may also be obtained for free from AmeriSource or from Bergen Brunswig
by directing such request to AmeriSource Health Corporation, General Counsel,
1300 Morris Drive, Suite 100, Chesterbrook, Pennsylvania 19087-5594, Telephone:
(610) 727-7000; or to Bergen Brunswig Corporation, Attention: Corporate
Secretary, 4000 Metropolitan Drive, Orange, California 92868-3510, Telephone:
(714) 385-4000.
Participants in Solicitation
AmeriSource and Bergen Brunswig and their respective directors, executive
officers and other members of their management and employees may be deemed to be
participants in the solicitation of proxies from their respective stockholders
in connection with the proposed merger. Information concerning AmeriSource's
participants in the solicitation is set forth in AmeriSource's Current Report on
Form 8-K filed with the Securities and Exchange Commission on March 19, 2001,
and information concerning Bergen Brunswig's participants in the solicitation is
set forth in Bergen Brunswig's Current Report on Form 8-K filed with the
Securities and Exchange Commission on March 19, 2001.
********
AmeriSource-Bergen
Corporation
- --------------------------------------------------------------------------------
A Winning Combination
March 19, 2001
AmeriSource-Bergen
Forward-Looking Statements
This presentation contains certain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are based on management's
current expectations and are subject to uncertainty and changes in
circumstances. Actual results may vary materially from the expectations
contained in the forward-looking statements. The forward-looking statements
herein include statements addressing future financial and operating results of
AmeriSource and Bergen Brunswig and the timing, benefits and other aspects of
the proposed merger.
More detailed information about the factors that could cause actual results to
differ materially from those described in the forward-looking statements is set
forth in AmeriSource's and Bergen's filings with the Securities and Exchange
Commission, including each of their Annual Reports for fiscal 2000 and their
most recent quarterly reports on Form 10-Q. The companies are under no
obligation to update or alter the matters discussed in this presentation.
1
Robert E. Martini
- --------------------------------------------------------------------------------
Chairman
AmeriSource-Bergen Corporation
AmeriSource-Bergen
Transaction Highlights
- --------------------------------------------------------------------------------
AmeriSource and Bergen combine to create
a new company
- --------------------------------------------------------------------------------
o $35 billion in pro forma revenues
o Combined market value of more than $5 billion
o Non-dilutive before synergies under new purchase accounting
o Expected annual synergies in excess of $125 million by end of third year
o Experienced management team
o Beneficial to customers
3
AmeriSource-Bergen
Strategic Rationale
- --------------------------------------------------------------------------------
Strategic Fit
Significant Synergies
Enhanced Customer Service
Reduced Healthcare Costs
Shareholder Value
4
AmeriSource-Bergen
Transaction Overview
- --------------------------------------------------------------------------------
o Merger of equals -- 51%/49% ownership
o Stock-for-stock tax-free exchange
o Both firms merge into new company
o New purchase accounting -- proposed rules
o Non-dilutive to EPS before synergies
o Headquarters in Valley Forge, PA; West Coast
management center in Orange, CA
5
AmeriSource-Bergen
Transaction Economics
- --------------------------------------------------------------------------------
o Each share of Bergen converted into 0.37 share of new company
o Each share of AmeriSource converted into one share of new company
o Approximately 103 million shares in
AmeriSource-Bergen outstanding
o Expected 2.5(cent)/share quarterly divided
o Closing summer 2001
6
AmeriSource-Bergen
Board Structure
- --------------------------------------------------------------------------------
o 10-member Board
o Chairman Robert Martini
o CEO and President David Yost
o Six independent directors:
3 from AAS and 3 from BBC
o Two additional new independent directors to be named
7
AmeriSource-Bergen
Two Solid Companies
- --------------------------------------------------------------------------------
Bergen Brunswig
------------------------------
o 3rd largest national pharmaceutical distributor
o 2nd largest long-term care pharmacy provider
o 10,000 employees
o 30 DCs and specialty businesses
AmeriSource
--------------------------
o 4th largest national pharmaceutical distributor
o 3,800 employees
o 22 DCs and specialty businesses
8
AmeriSource-Bergen
Major Pharmaceutical Distributors(a)
- --------------------------------------------------------------------------------
AmeriSource-Bergen McKesson HBOC Cardinal (Bindley) Bergen Brunswig AmeriSource
- ------------------ ------------- ------------------ --------------- -----------
($ in billions)
$35 $31 $30 $22 $13
(a) FY2000 sales based on company filings. Public pharmaceutical distributors
with sales greater than $1 billion and excludes chains and other distributors.
9
David Yost
- --------------------------------------------------------------------------------
Chief Executive Officer & President
AmeriSource-Bergen Corporation
AmeriSource-Bergen
Leadership
- --------------------------------------------------------------------------------
o Combined management team has extensive industry experience
o Chairman: Robert Martini
o CEO and President: David Yost
o EVP and COO: Kurt Hilzinger
o EVP and CFO: Neil Dimick
11
AmeriSource-Bergen
Merger Benefits
- --------------------------------------------------------------------------------
o Makes two solid companies better
o Business we both know -- low integration risk
o Compatible, customer-focused cultures
o Opportunity to expand offerings to customers
o Annual operating synergies in excess of $125 million by end of third year
o Continue to take costs out of healthcare system
12
AmeriSource-Bergen
Strategic Fit
- --------------------------------------------------------------------------------
AmeriSource Bergen Brunswig
----------- ---------------
o Strong in East o Strong in West
o Largest hospital provider o Leader in alternate site
o Strong with independents o Strong with independents
o Regional chain expertise o Regional/Large chain expertise
o Commitment to customer service o Commitment to customer service
13
AmeriSource-Bergen
Superior Customer Service
- --------------------------------------------------------------------------------
o Both companies focused on the customer
o Highly rated in independent customer surveys
o Sales forces are industry leaders
14
AmeriSource-Bergen
Value-Added Solutions
- --------------------------------------------------------------------------------
High Service Level, Lower Inventory Investment
----------------------------------------------
Manufacturer AmeriSource-Bergen Provider
o Co-marketing and market share o PharMerica
programs
o ASD Specialty
o Contract compliance and
monitoring o American Health Packaging
o Repackaging to economic o Pharmacy Healthcare Solutions
dispensing quantities
15
AmeriSource-Bergen
Synergies
- --------------------------------------------------------------------------------
o $125 million in savings by end of third year
- Rationalization of distribution network
- Consolidation of corporate staffs
- Purchasing efficiencies, especially generics
o Other opportunities for synergies
- Working capital savings
- Access to lower cost capital
16
AmeriSource-Bergen
Distribution Centers
- --------------------------------------------------------------------------------
[MAP]
17
AmeriSource-Bergen
Technology
- --------------------------------------------------------------------------------
o Information Week Magazine
- Top 200 of all Companies in technology use
- Top two companies in pharmaceutical distribution
o iECHO and iBergen order/inventory systems
o "Autonomics" central processing
o Central fill
18
AmeriSource-Bergen
Path Forward
- --------------------------------------------------------------------------------
o FTC approval
o Shareholder vote
o Closing
19
AmeriSource-Bergen
A Winning Combination
- --------------------------------------------------------------------------------
Strategic Fit
Significant Synergies
Enhanced Customer Service
Reduced Healthcare Costs
Shareholder Value
20
********
AmeriSource-Bergen
Conference Call Script
Leader: Good morning, everyone. We're here to discuss the combination of
AmeriSource Health Corporation and Bergen Brunswig Corporation
announced earlier this morning. If you have not yet received a
copy of the release, please call Morgen-Walke at 212-850-5698.
With us on this morning's call are Robert E. Martini, Chairman
and Chief Executive Officer of Bergen Brunswig and R. David Yost,
Chairman and Chief Executive Officer of AmeriSource. Also
joining us are Kurt Hilzinger, President and Chief Operating
Officer of AmeriSource, and Neil F. Dimick, Bergen's Chief
Financial Officer. After management has concluded their formal
remarks, a question-and-answer period will follow. The operator
will instruct you on procedure at that time.
Before we get started, I would like to remind everyone that this
conference call will contain certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. These
statements are based on management's current expectations and are
subject to uncertainty and changes in circumstances.
The forward-looking statements herein include statements
addressing future financial and operating results of AmeriSource
and Bergen Brunswig and the timing, benefits and other aspects of
the proposed merger.
More detailed information about factors that could cause actual
results to differ materially from those described in the forward-
looking statements are set forth in AmeriSource's and Bergen
Brunswig's filings with the Securities and Exchange Commission.
The companies are under no obligation to update or alter their
forward-looking statements.
So, with these formalities out of the way, I'd like to turn the
call over to Bob Martini.
R. Martini: Good morning and thank you for joining us. We are very excited
about this morning's announcement and our plans to combine
AmeriSource and Bergen Brunswig and create a new $35 billion
healthcare services company.
This is a well thought out combination which we have been working
on for some time. There are so many reasons why this is a
strategically compelling transaction. We are confident that
bringing our two great companies together will allow us to
deliver enhanced benefits for shareholders, customers, suppliers,
and employees.
We will be creating a new company that will be one of the 50
largest in the U.S. in terms of revenue. I am comfortable that
this is such a good fit because I know that we both have
corporate cultures that are recognized for their focus on
quality, efficiency and customer satisfaction.
As independent companies, we each have tremendous strengths. But
we are very excited by the opportunity this combination brings -
to generate enhanced growth, achieve substantial synergies and
produce benefits for suppliers and customers of both
organizations.
The organization that we will create will combine the best of
both AmeriSource and Bergen.
That's reflected in our new name, AmeriSource-Bergen Corporation,
and our new structure. There will be equal representation of the
Board of Directors. There will be a total of ten members, with
eight independent directors, including three from each company.
Also, AmeriSource-Bergen will nominate two additional
unaffiliated directors.
I will now turn the call over to Dave Yost, the Chairman and CEO
of AmeriSource. I've known Dave for many years as a terrific
competitor. As many of you know, we have had a CEO search
underway at Bergen, and Dave embodies the qualities we've been
looking for: a proven track record, hands-on operating
experience, strategic vision, and leadership. I am looking
forward to working with Dave, who will become the CEO and
President of the new company.
Dave?
D. Yost: Thanks, Bob. Good morning everyone. On behalf of everyone at
AmeriSource, I'd like to convey our excitement about this
transaction.
Bob touched on a few of the strategic, financial, operating and
cultural reasons for this transaction.
As he said, they are compelling.
First, it is important to note that this combination is not about
being big. It's about being the best. We will take the best from
each Company. We have chosen to create an entirely new company,
AmeriSource-Bergen, to reflect our best of the best approach.
Over the next several months we will develop the operating
policies, organizational structure and the like that best suits
our new enterprise.
AmeriSource and Bergen are a great geographic and strategic fit.
Together, we will be the absolute finest wholesale drug operation
in the U.S.
While we both operate nationally, AmeriSource has a larger
presence in the Eastern U.S. and Bergen's distribution business
has a larger presence in the West.
AmeriSource's strength is in the acute care business, independent
retail pharmacy programs and regional chains. Bergen is strong
in the long-term care business, independent retail regional
chains, as well as national chains. We also feel that
PharMerica's long-term-care pharmacies and its workers'
compensation business as well as ASD's specialty healthcare
offerings of oncology, vaccines and biotech products, which are a
part of Bergen's portfolio of businesses, will enhance
AmeriSource-Bergen's position in healthcare. We believe we will
be able to serve all market segments better.
Our businesses match up in other ways. AmeriSource's American
Health Packaging unit will provide added benefits to Bergen's
PharMerica and drug distribution operations. Throughout all
their operations, both companies share a common culture of
providing outstanding service and making customer satisfaction
paramount.
The new management team also reflects our combined capabilities.
. The senior management team will include Kurt J. Hilzinger, the
President and Chief Operating Officer of AmeriSource, who will
become Executive Vice President and Chief Operating Officer of
the combined company.
. Neil F. Dimick, Bergen's current Chief Financial Officer, will
become Executive Vice President and Chief Financial Officer of
the new Company.
The new Company structure also includes an Executive Management
Committee, which I will head. The AmeriSource-Bergen committee
will include Kurt Hilzinger and Neil Dimick as well as three
Senior Vice Presidents who will report to Kurt:
. Brent R. Martini, President of the drug distribution business
at Bergen, will become President of AmeriSource-Bergen Drug
Company.
. Charles J. Carpenter, now the President of PharMerica, will
remain in the same position at the new company.
. Steven H. Collis, President of Bergen's ASD Specialty
Healthcare, Inc., will continue to head the unit under
AmeriSource-Bergen
AmeriSource-Bergen will be headquartered in Valley Forge. There
will also be an East Coast operations center there as well as a
West coast operations center in Orange, California.
I know many of you are wondering about FTC review. We have made
a very thorough and lengthy study of the antitrust issues with
our legal, economic and financial antitrust experts and, based on
that study, we do not anticipate that the FTC will challenge this
merger.
We believe that for several reasons: this transaction does not
reduce competition, nor does it violate antitrust laws.
In fact, we believe very strongly that the combination of
AmeriSource and Bergen will enhance competition in drug
distribution.
. The merger will not only enhance the competitive position and
efficiency of AmeriSource and Bergen, it will also improve
competition in drug distribution generally.
. That is because a combined company will be in a position to
achieve the economies of scale that are greater than either of
us could achieve on our own.
. It's worth noting that the situation today bears little
resemblance to 1997. There is every reason to believe that our
transaction will ensure that drug distribution remains dynamic
and intensely competitive.
We also expect the transaction to pass with the FTC because
distribution is about the only major area of healthcare where
costs are going down. Both AmeriSource and Bergen have met that
challenge consistently and steadily over time. This combination
will continue that trend.
And finally, this transaction will allow us to enhance and expand
the programs and services we offer our customers. Many of our
customers have encouraged us to move forward with this
transaction.
In short, we are confident that the combined company will be an
efficient healthcare supply chain management company well
positioned to compete and grow.
Customer focus and service orientation was one of the early
issues that Bob and I discussed in bringing these two fine
companies together. We share a vision that this new corporate
entity will be the standard for service in the industry and will
enhance and expand our already strong service offering.
With that, I'd like to turn the call over to Kurt Hilzinger,
President and Chief Operating Officer of AmeriSource to further
detail the benefits of this transaction and the synergies that we
anticipate achieving.
K. Hilzinger: Thanks Dave. Good morning, everyone. As noted in the press
release, we expect that combined company will achieve more than
$125 million in annual operating savings by the end of the third
year after the transaction closes. We have done a significant
amount of work to identify the synergies of this transaction.
Our approach to the integration is straightforward: Take the
best from each company.
This will be achieved by:
1. Fewer, but larger and more efficient distribution centers.
2. The consolidation of our corporate staffs.
3. Efficiencies in purchasing, especially in our generics
programs, and improved buying and vendor margin opportunities.
4. Lower financing costs, and improved working capital turns; for
example, we expect to reduce replenishment days in inventory.
5. Combining and significantly enhancing customer offerings and
programs.
These synergies are tangible and achievable, and both companies
have proven track records of consolidating our respective
operations in recent years. For example, at AmeriSource we have
integrated C.D. Smith and centralized our information systems.
Bergen Brunswig has done a significant
amount of work to continue to rationalize their distribution
network.
As many of you know, each of our companies have network
expansions planned and this combination will allow us to
rationalize our investments and avoid duplicative capital
expenditures as we accommodate growth in our business.
. At this time we will not specifically address some of the
details regarding the integration, including the number and
location of DCs to be consolidated. But as we get closer to the
completion of the merger, we will then be in a position to
provide more information.
. We do expect that our staffing levels will be reduced in
connection with the consolidation of the corporate and
distribution center level staffs. We have told our people that
senior management of both companies will work together to
analyze the capabilities of the two organizations in order to
determine the best possible organizational structure following
the merger. That is exactly what we are going to do.
At this point, I'd like to turn the call over to Neil Dimick,
Chief Financial Officer of Bergen, who will take you through the
transaction.
N. Dimick: Thank you, Kurt. I'd like to spend a few moments walking you
through the key components of the combination.
Stock-for-stock transaction:
. Each share of Bergen Brunswig common stock will be converted
into 0.37 share of the new company -- AmeriSource-Bergen common
stock.
. Each share of AmeriSource stock will be converted into one
share of AmeriSource-Bergen common stock.
. The transaction will be tax free to shareholders of both
companies.
. The new company will have approximately 103 million shares
outstanding. Current AmeriSource shareholders owning
approximately 51% of the combined company and current Bergen
Brunswig shareholders owning approximately 49%.
. Based on our closing stock prices on Friday, the new company
will have a pro forma market capitalization of $5 billion
Debt:
-----
. Combined company will have approximately $2.0 billion of debt
and a total enterprise value of $7.0 billion.
Dividend:
---------
. We expect to pay a quarterly dividend of 2 1/2 cents/share.
Accounting Issues:
------------------
. As we noted, the transaction will be accounted for as a
purchase transaction under new guidelines for business
combinations proposed by the Financial Accounting Standards
Board (FASB).
. Under the proposed new business combination accounting
guidelines, the companies anticipate that there will be
approximately $10 million in annual expenses related to
purchase accounting adjustments. These adjustments will be more
than offset by the elimination of $23 million per year of
goodwill amortization for the combined company.
. Under the proposed FASB purchase accounting rules, the
transaction is expected to be non-dilutive before synergies and
special charges.
. Under existing purchase accounting rules, the merger will be
accretive in the second full year as synergies are realized,
excluding special items.
Other Items:
------------
. We believe this transaction is a credit enhancing event. With
no additional debt, improved working capital turns, and the
----------
increase on operating cash flow through the realization of
synergies will facilitate deleveraging.
------------
. Based on discussions with our financial advisors, we anticipate
that we will be able to refinance our respective credit
facilities at attractive rates.
. As many of you know, each of our management teams has utilized
return on committed capital metrics to evaluate financial
performance, and this will continue to be a cornerstone of our
financial philosophy going forward.
Anticipated Closing:
---------------------
While the transaction has been approved by the Boards of
Directors of both companies, it is subject to Hart-Scott-Rodino
review, shareholder approval, confirmation of the new FASB
purchase accounting rules, and other customary closing
conditions. As a result, we do not expect that the merger will
close until the summer of 2001.
I will now turn the call back over to Jeff who will coordinate
questions.
After conclusion of Q&A
-----------------------
D. Yost: Thank you for joining us today, and in closing, I would like to
reiterate our excitement about this merger and our confidence
that we will effectively combine the best people, programs and
operations from each company to emerge as an even stronger and
more efficient player in the pharmaceutical distribution
business.
********
TO: BBC Management
FROM: Executive Lead Team
DATE: March 19, 2001
SUBJECT: AmeriSource-Bergen Corporation
This morning, AmeriSource and Bergen Brunswig issued a joint press release in
which they announced the signing of a definitive merger agreement. The merger is
subject to shareholder and other customary approvals, and is expected to be
consummated in the summer of 2001. However, it is extremely important to
understand that the merger is not yet completed and until the transaction is
closed, the following applies:
o AmeriSource continues to be a competitor and should be treated as such
until the merger is completed. Unless you receive different
instructions from your manager, you will be expected to carry out your
normal day-to-day responsibilities with the same goals and objectives
expected of you prior to this announcement.
o It is equally important to understand the significance of communicating
a clear and consistent message to our customers, suppliers, associates
and other partners. For this reason, it is extremely important that you
promptly review and thoroughly familiarize yourself with the following
attachments:
I. Memo to all BBC Associates from Bob Martini
II. Associate Q & A
III. Communication Guidelines
IV. AmeriSource/Bergen Brunswig Merger Summary
V. Customer Discussion Points (Drug Co. Focused)
VI. Supplier Discussion Points
VII. Customer Q & A (Drug Co. Focused)
VIII. Supplier Letter
IX. Required Securities Act Legends
If you have any questions regarding these materials, please see your manager for
clarification. Please access the press release via the Bergen Brunswig website
and/or intranet.
The announcement of this merger is a very significant event in Bergen's
corporate history. Following completion of the merger, Bergen Brunswig and
AmeriSource will become a new company under the name of AmeriSource-Bergen
Corporation with the combined company's headquarters located in Valley Forge,
Pennsylvania and a west coast management center located in Orange, California.
The new management structure will reflect an integration of leadership with
Robert E. Martini, currently chairman of Bergen Brunswig, as chairman of the
combined company and David Yost, AmeriSource's chairman and chief executive
officer, as chief executive officer and president. The senior management of
AmeriSource-Bergen will also include Kurt Hilzinger, the President and Chief
Operating Officer of AmeriSource, who will
become Executive Vice president and Chief Operating Officer of the combined
company, and Neil Dimick, Bergen's current Chief Financial Officer, who will
become Executive Vice President and Chief financial Officer of the new Company.
The new Company structure also includes an Executive Management Committee. Led
by CEO Yost, the AmeriSource-Bergen committee will include Hilzinger and Dimick
as well as three Senior Vice Presidents. They are Brent Martini, President of
the drug distribution business at Bergen, who will become President of
AmeriSource-Bergen Drug Company; Chuck Carpenter who will continue as President
of PharMerica, now a Bergen subsidiary; and Steve Collis, President of Bergen's
ASD Specialty Healthcare, Inc., who will continue to head the unit under
AmeriSource-Bergen. Each of these companies will become subsidiaries of
AmeriSource-Bergen Corporation.
The merger of AmeriSource and Bergen Brunswig represents a unique opportunity to
build on the best qualities and strengths that made each company successful on a
stand alone basis. Naturally, the integration presents us with a tremendous
challenge but we expect to successfully meet this challenge while competitively
pursuing opportunities based on the improved efficiencies of the combined
company.
We are proud to join forces with a company of AmeriSource's caliber and look
forward with great anticipation to the establishment of this new organization.
However, until the merger transaction is completed Bergen Brunswig and
AmeriSource remain competitors and we must do all we can to build on our
successes by staying focused on the job at hand of providing the highest quality
products and services to our customers and supplier partners.
********
TO: BBDC Management
FROM: Brent Martini
DATE: March 19, 2001
SUBJECT: AmeriSource-Bergen Corporation
This morning, AmeriSource and Bergen Brunswig issued a joint press release in
which they announced the signing of a definitive merger agreement. The merger is
subject to shareholder and other customary approvals, and is expected to be
consummated in the summer of 2001. However, it is extremely important to
understand that the merger is not yet completed and until the transaction is
closed, the following applies:
o AmeriSource continues to be a competitor and should be treated as such
until the merger is completed. Unless you receive different
instructions from your manager, you will be expected to carry out your
normal day-to-day responsibilities with the same goals and objectives
expected of you prior to this announcement.
o It is equally important to understand the significance of communicating
a clear and consistent message to our customers, suppliers, associates
and other partners. For this reason, it is extremely important that you
promptly review and thoroughly familiarize yourself with the following
attachments:
I. Memo to all BBC Associates from Bob Martini
II. Associate Q & A
III. Communication Guidelines
IV. AmeriSource/Bergen Brunswig Merger Summary
V. Customer Discussion Points
VI. Supplier Discussion Points
VII. Customer Q & A
VIII. Supplier Letter
IX. Required Securities Act Legends
If you have any questions regarding these materials, please see your manager for
clarification. Please access the press release via the Bergen Brunswig website
and/or intranet.
The announcement of this merger is a very significant event in Bergen's
corporate history. Following completion of the merger, Bergen Brunswig and
AmeriSource will become a new company under the name of AmeriSource-Bergen
Corporation with the combined company's headquarters located in Valley Forge,
Pennsylvania and a west coast management center located in Orange, California.
The new management structure will reflect an integration of leadership with
Robert E. Martini, currently chairman of Bergen Brunswig, as chairman of the
combined company and David Yost, AmeriSource's chairman and chief executive
officer, as chief executive officer and president. The senior management of
AmeriSource-Bergen will also include Kurt Hilzinger, the President and Chief
Operating Officer of AmeriSource, who will
become Executive Vice president and Chief Operating Officer of the combined
company, and Neil Dimick, Bergen's current Chief Financial Officer, who will
become Executive Vice President and Chief financial Officer of the new Company.
The new Company structure also includes an Executive Management Committee. Led
by CEO Yost, the AmeriSource-Bergen committee will include Hilzinger and Dimick
as well as three Senior Vice Presidents. They are Brent Martini, President of
the drug distribution business at Bergen, who will become President of
AmeriSource-Bergen Drug Company; Chuck Carpenter who will continue as President
of PharMerica, now a Bergen subsidiary; and Steve Collis, President of Bergen's
ASD Specialty Healthcare, Inc., who will continue to head the unit under
AmeriSource-Bergen. Each of these companies will become subsidiaries of
AmeriSource-Bergen Corporation.
The merger of AmeriSource and Bergen Brunswig represents a unique opportunity to
build on the best qualities and strengths that made each company successful on a
stand alone basis. Naturally, the integration presents us with a tremendous
challenge but we expect to successfully meet this challenge while competitively
pursuing opportunities based on the improved efficiencies of the combined
company.
We are proud to join forces with a company of AmeriSource's caliber and look
forward with great anticipation to the establishment of this new organization.
However, until the merger transaction is completed Bergen Brunswig and
AmeriSource remain competitors and we must do all we can to build on our
successes by staying focused on the job at hand of providing the highest quality
products and services to our customers and supplier partners.
********
ATTACHMENT I
To: Bergen Brunswig Associates
From: Bob Martini
Date: March 19, 2001
Subject: AmeriSource-Bergen Corporation
Bergen Brunswig Corporation has entered into a definitive agreement with
AmeriSource to form a new company called AmeriSource-Bergen Corporation. I think
you will see we are creating a company that will play an important role in the
healthcare industry throughout the new century.
The AmeriSource Bergen Brunswig combination will create an efficient and
balanced healthcare services company well positioned to compete in our intensely
competitive marketplace. Together we will offer an attractive combination of
capabilities including drug distribution, clinical and operational information
services, packaging, automation, outsourcing, and formulary management. In
addition, PharMerica's long term care pharmacies and its workers' compensation
business as well as ASD's specialty healthcare offerings of oncology, vaccines
and biotech products, which are a part of Bergen's portfolio of businesses, will
enhance AmeriSource-Bergen's position in healthcare services by providing
greater depth of product offerings. The annual revenue of the combined entity
will exceed $35 billion.
The new management structure will reflect an integration of leadership with
Robert E. Martini, currently chairman of Bergen Brunswig, as chairman of the
combined company and David Yost, AmeriSource's chairman and chief executive
officer, as chief executive officer and president. The senior management of
AmeriSource-Bergen will also include Kurt Hilzinger, the President and Chief
Operating Officer of AmeriSource, who will become Executive Vice president and
Chief Operating Officer of the combined company, and Neil Dimick, Bergen's
current Chief Financial Officer, who will become Executive Vice President and
Chief financial Officer of the new Company. The new Company structure also
includes an Executive Management Committee. Led by CEO Yost, the
AmeriSource-Bergen committee will include Hilzinger and Dimick as well as three
Senior Vice Presidents. They are Brent Martini, President of the drug
distribution business at Bergen, who will become President of AmeriSource-Bergen
Drug Company; Chuck Carpenter who will continue as President of PharMerica, now
a Bergen subsidiary; and Steve Collis, President of Bergen's ASD Specialty
Healthcare, Inc., who will continue to head the unit under AmeriSource-Bergen.
Each of these companies will become subsidiaries of AmeriSource-Bergen
Corporation.
While we have worked together over the years to build Bergen Brunswig into the
quality organization it is today, and feel comfortable that as a stand alone
entity we are a strong and
effective competitor, this combination will create a company that is even
stronger and truly stands out from the rest. I know that forming
AmeriSource-Bergen Corporation is in the best interest of our shareholders,
customers, and our associates. I have deep regret, however, that not all
associates will be assured a position in the new Company. I promise you that all
associates will be treated with respect and fairness throughout all decision
making processes.
So where do we go from here? It is very important to know that the official
closing of the agreement between the two companies will take some time. In fact,
we do not anticipate the close until sometime in the summer of 2001. Between now
and then, we need to continue the due diligence process, and gain shareholder
and other customary approvals. During this time, it is imperative that we build
on our successes and continue the momentum we have achieved by running our
business to the best of our abilities and provide the highest quality of
products and services to our valued customers. In the unlikely event that the
transaction is not accomplished, we will continue with our strategic plan of
moving from simply being a deliverer of goods and services to being an integral
partner with our customers and suppliers in all markets we serve.
I am sure many of you will have questions about today's announcement. Attached
to this memo is a copy of our Press Release describing the transaction as well
as a Question and Answer document that was prepared to provide you with the best
answers we can at this time to your anticipated questions. We know there will be
many more questions in the upcoming days and weeks and therefore have set up a
confidential 800 phone mail box for your convenience. The number is
1-800-447-8011; within the Bergen Brunswig phone mail system you can leave a
message with your questions and comments by calling extension 4842. Please do
not hesitate to address your questions to your management team as well. We will
continue to communicate with you frequently over the coming days, weeks, and
months as to our ongoing progress.
As in the past, I have always been able to count on your support, and I know I
can count on you now. Thank you for continuing to "Make A Difference".
********
ATTACHMENT II
AMERISOURCE-BERGEN CORPORATION
Associate Questions & Answers
1. Why are you merging the two companies?
There are a number of compelling reasons for this combination. We believe that
AmeriSource-Bergen will be an efficient and attractive healthcare services
company well positioned to compete in our intensely competitive marketplace.
In many respects, AmeriSource and Bergen are a perfect fit. Both companies have
built strong, successful nationwide drug distribution businesses. Both companies
share a deep commitment to superior customer service. Both companies have
similar corporate cultures. The new combined company will bring a balance to the
marketplace in terms of both geography and customer groups. While both operate
nationally, AmeriSource has a larger presence in the Eastern U.S., and Bergen's
distribution business has a larger presence in the West. The companies have
complementary independent retail pharmacy programs. Both companies supply the
hospital or health systems market that will benefit from the addition of
Bergen's alternate site business. Also, AmeriSource's American Health Packing
unit will provide added benefits to Bergen's PharMerica. AmeriSource and Bergen
Brunswig share a common culture of providing quality service and making customer
satisfaction paramount.
2. What is the time frame for the transaction?
The transaction must be approved by shareholders. It is also subject to
regulatory and other customary approvals. We expect the merger to be completed
sometime during the summer of calendar year 2001. No changes will be made until
after the merger is completed. Therefore, it is much too early to speculate on
any specific changes. For legal and other business reasons, Bergen and
AmeriSource must remain separate independent organizations until the merger is
consummated. This means that you must continue to treat AmeriSource as a
competitor until after the merger is completed. We will communicate any
organizational changes to you as far in advance as we are allowed under the law.
3. Will our distribution centers be consolidated?
Yes, there will be some consolidation between the two distribution companies.
However, for legal and other important business reasons, Bergen and AmeriSource
will continue to operate independently through their existing distribution
networks until after the merger is consummated. Any decision regarding where
consolidation makes sense for the combined company is an ongoing process that
will take time and input from a variety of sources, including associates,
customers, suppliers and others to determine the most efficient and high quality
distribution network.
We deeply regret that not all associates will be assured a position following
the consolidation. Both AmeriSource and Bergen have promised that all associates
will be treated with respect and fairness throughout the decision making
process. In addition, outplacement services and severance will be provided to
each individual adversely affected by the reorganization. At this point,
however, no final plans have been made, and no concrete actions can be taken
until the merger is approved and finalized. Any consolidation that affects
Bergen associates will be communicated as far in advance of implementation as
legally and practically possible.
4. Where will the corporate headquarters be located?
The Corporate headquarters will be located at AmeriSource's current headquarters
in Valley Forge, Pennsylvania.
5. What corporate/general office departments will most likely be consolidated?
It is difficult to determine what departments will be the first to consolidate;
a great deal of due diligence needs to be performed. While the headquarters will
be in Pennsylvania, certain functions will remain in the west coast management
center in Orange, California in order to provide the appropriate support and
services to the new, larger organization. As has always been our practice, we
will communicate with you on an ongoing basis and keep you apprised of
consolidation decisions and time frames. Many of you will be asked to assist in
the due diligence process and we look forward to your input.
6. Will there be layoffs?
Bergen and AmeriSource senior management will work together to analyze the
capabilities of the two organizations in order to determine the best possible
organizational structure. The best practices of each organization, as well as
the anticipated future growth and staffing needs of the combined company, will
be instrumental in this decision making process. We expect that gaining
efficiencies through certain departmental and distribution center combinations
will result in the reduction of current staffing levels. This kind of analysis
takes time however, and it is premature to speculate on the ultimate outcome or
where staffing reductions will occur. When the time comes for making these
difficult decisions, AmeriSource-Bergen intends to carefully consider the needs
of the affected associates and treat them fairly and with respect. We have a
long way to go before this merger is completed and before any merger related
changes are made. Your human resources representative will communicate any
planned changes as soon as legally and practically possible.
7. In the event of any layoffs company-wide, will there be severance packages
offered?
Yes, severance packages will be provided to those associates who are laid off as
a result of the acquisition. Associates will be given a minimum of two months'
notice. Severance packages always include pay for all unused earned and accrued
vacation. Please keep in mind that much analysis needs to take place during the
due diligence period to determine the need for staff reductions. In addition,
the task of combining two organizations the size of Bergen Brunswig and
AmeriSource can take several years, after the official closing of the agreement.
8. Will anyone be asked to relocate? If yes, will relocation assistance be
provided?
Once again, the analysis of both organizations may result in relocation
opportunities for some associates. Any associate who is asked to relocate will
be provided with relocation assistance.
9. Will associate benefit plans change? If so, how and when?
Until after the merger is completed, all compensation and benefit plans will
continue to be administered as they are today. After completion of the merger,
appropriate studies will be performed as to which programs are suitable for the
new organization. The Company remains committed to providing a competitive and
comprehensive benefits package.
10. What happens to the Bergen Brunswig 401k Plan? Investment Options? Loans?
Bergen Brunswig's 401K plan, including all investment options and loan options,
will stay in place as long as Bergen Brunswig operates as an independent entity.
During the due diligence period, we will be analyzing both Bergen Brunswig's and
AmeriSource's 401K plans to determine the best plan for all associates.
11. Should I change my day-to-day activities or my approach to my
responsibilities?
No, you should continue to carry out normal day-to-day responsibilities with the
same goals and objectives as those established prior to this announcement.
Please be aware that Bergen may be subject to regulatory review and approval
processes in the next few months. You may be asked to assist in this process.
Furthermore, associates should exercise caution to ensure that all
communications regarding the merger or our business (written and oral) is both
accurate and factual. If you have any questions, please contact your supervisor.
12. Will my hours change?
Your hours will change only if business requires a change, and then we will
adapt to those demands the way we have in the past.
13. Will Bergen Brunswig Drug Company's programs and services change?
Programs and services from each company will be benchmarked and the best
practices of each will be adopted. One of the reasons for the merger is to have
additional resources to make investments in new opportunities, extend our
combined product offering to a larger customer base and enhance our customer
programs and value-added services.
14. Is this a merger or an acquisition?
This is a merger transaction that will create a new company, which will be
called AmeriSource-Bergen Corporation.
15. What will the combined organization look like and what is contemplated for
the future?
The current BBC organization will continue to operate independently until the
agreement is closed. Bergen Brunswig Drug Company will be combined with
AmeriSource's Drug Company, and, along with Bergen Brunswig Specialty Company
and PharMerica, will be subsidiaries of the new company. Robert E. Martini will
be Chairman of the Board of AmeriSource-Bergen Corporation, and David Yost,
AmeriSource's current Chairman and CEO will be the CEO and President.
16. Is there a chance this merger may not occur?
The completion of any merger is subject to terms and conditions, and
AmeriSource-Bergen is no exception. The merger is subject to shareholder,
regulatory and other customary closing conditions. We are committed to doing
everything possible to see that the merger is completed.
17. What happens if the transaction does not go through?
The pairing with AmeriSource produces combined benefits and strength. However,
if the transaction is not consummated, Bergen's overall corporate strategy will
not change.
18. What will customers of Bergen and AmeriSource think about the transaction?
Both Bergen and AmeriSource have talked with a number of customers and they have
expressed strong support for the merger. These customers recognize that our
goals are to enhance our service and become more efficient.
19. Is the FTC going to review this merger? Why do you think this merger can get
done when the Bergen Brunswig/Cardinal and AmeriSource/McKesson combinations
did not get done in 1998?
We expect that the FTC will review this transaction as a matter of routine
course. We do not believe the FTC will challenge it because, in our analysis,
this transaction does not reduce competition and does not violate anti-trust
laws. This merger differs from the combinations proposed in 1998, primarily
because the combination of companies is different and the nature of competition
within the wholesale drug industry is different today than in 1998. In addition,
key customers have expressed strong support for the AmeriSource-Bergen merger.
20. Does the fact that there is a new Administration in Washington D. C. have
any impact on a potential FTC review?
Under current industry conditions, we believe this transaction would pass muster
at the FTC under any administration. Indeed, the make-up of the FTC has not
changed. Having said that, we certainly expect that if there is a change in FTC
administration while this transaction is pending HSR review, the next
administration will be at least as hospitable as the current administration.
21. What will happen to Bergen Brunswig's REWARD and management bonus programs?
Bergen Brunswig is still an independent operating entity until the closing,
therefore, the opportunity to earn a REWARD and management bonus will continue
for the current fiscal year. As in years past, we will be reviewing all our
bonus programs prior to the beginning of FY02 and will make any necessary
adjustments. You will be notified if any adjustments are made.
22. What do I do if the media calls?
It is very important that we communicate a clear and consistent message to our
customers, suppliers, associates, and other partners. Do not respond to any
questions from the news media or any requests for official statements about the
merger. All such requests should be forwarded to Donna Dolan, Vice President,
Investor Relations in the Orange General Office.
********
ATTACHMENT III
COMMUNICATION GUIDELINES
As you have read in the materials distributed to you today, it is extremely
important to understand the significance of communicating a clear and consistent
message to our customers, suppliers, associates and other partners. You have
been given a number of items to use in coaching your associates in what to say.
Please review and practice the following communications guidelines:
1. Familiarize yourself with the following attachments: the Associate Q & A,
the AmeriSource/Bergen Merger Summary, the Customer Discussion Points,
Supplier Discussion Points, Customer Q & A, and Drug Supplier Letter so
that you can respond in a clear and concise manner to questions or
comments of associates, customers, vendors, and others.
2. In order to avoid incorrect or misleading comments, you should avoid
in-depth discussions with any customer, vendor or other person concerning
details of the merger. Stick to the Discussion Points and explain that, for
legal and other important business reasons, you are not able to discuss
specifics at this time.
3. If the customer, vendor or other person presses you for more detailed
information, or an explanation of what the merger would mean to their
organization, stick to the discussion points and explain that (a) the
merger is not completed yet, and (b) any details will be shared with them
as soon as legally and practically possible.
4. Please promptly communicate to your manager any customer, vendor or other
person who is concerned about or opposed to the merger, so that an
appropriate follow-up can be made to address that concern or opposition.
5. This is a merger and the creation of a new company. Do not speculate on
organizational structure, program offering of the combined company or
timelines for completion of the merger.
6. It is not appropriate to discuss anything with AmeriSource associates,
including specific customer information or personnel information. We are
still independent companies in competition with one another.
7. Do not speculate on how the competition or government agencies may respond
to this merger.
8. Do not speculate on the impact on benefits, 401(k) plans, promotions, job
openings, etc.
9. Do not speculate on our manufacturers' reaction to this merger.
10. Do not speculate on the outcome of the vote of shareholders of the
companies regarding this merger.
11. Do not speculate on job changes or job elimination.
12. Do not make direct or casual promises or indications of continued
employment, severance amounts or "special deals" to associates.
Above all, do stay focused on your job and use the communication materials
provided.
********
ATTACHMENT IV
AMERISOURCE/BERGEN SUMMARY
Bergen Brunswig is very excited about the proposed merger with AmeriSource and
the creation of a new healthcare services company called AmeriSource-Bergen
Corporation. Both companies have a proud history in pharmaceutical wholesaling
and a strong customer following due to each company's demonstrated ability to
deliver innovative value added services and products which have enabled those
customers to prosper. We are very pleased at the prospect of combining the two
companies and the opportunity to build upon each company's success and
reputation, particularly in the areas of outstanding customer service, customer
satisfaction and quality. We anticipate that completion of the merger will take
several months, as the merger is subject to shareholder and other customary
approvals. Therefore, until the merger is completed, Bergen and AmeriSource will
remain independent and competing organizations.
Once the merger is completed the combined company will be named
AmeriSource-Bergen Corporation, and will consolidate volume in and begin serving
customers from an expanded distribution network. The new management structure
will reflect an integration of leadership with Robert E. Martini, currently
chairman of Bergen Brunswig, as chairman of the combined company and David Yost,
AmeriSource's chairman and chief executive officer, as chief executive officer
and president. The senior management of AmeriSource-Bergen will also include
Kurt Hilzinger, the President and Chief Operating Officer of AmeriSource, who
will become Executive Vice president and Chief Operating Officer of the combined
company, and Neil Dimick, Bergen's current Chief Financial Officer, who will
become Executive Vice President and Chief financial Officer of the new Company.
The new Company structure also includes an Executive Management Committee. Led
by CEO Yost, the AmeriSource-Bergen committee will include Hilzinger and Dimick
as well as three Senior Vice Presidents. They are Brent Martini, President of
the drug distribution business at Bergen, who will become President of
AmeriSource-Bergen Drug Company; Chuck Carpenter who will continue as President
of PharMerica, now a Bergen subsidiary; and Steve Collis, President of Bergen's
ASD Specialty Healthcare, Inc., who will continue to head the unit under
AmeriSource-Bergen. Each of these companies will become subsidiaries of
AmeriSource-Bergen Corporation.
The corporate headquarters for the combined company will be located in Valley
Forge, Pennsylvania with a west coast management center in Orange, California.
Once the merger is completed, greater specificity will be provided as to the new
management structure that will reflect an integration of management in key roles
from the merged companies.
As you know, both Bergen and AmeriSource have developed broad value-added
programs essential to their customers. This merger will have a positive impact
as a result of weaving the best programs from each into a combined offering.
This will include improved merchandising services, manufacturer and product
programs, third party reimbursement services and financial services that will
assist our retail customers to prosper. Hospital, integrated delivery systems
and
alternate site customers should anticipate further development of more
sophisticated order and inventory management systems, expanded software and EDI
interface capabilities to provide tools to analyze purchasing patterns and
formulary compliance. Additionally, the combined company will have a broad
service capability in hospital pharmacy automation, pharmacy management
services, information management services and pharmaceutical specialty
packaging. These service offerings will continue to expand as they are essential
in driving cost out of the supply chain and in facilitating ever increasing
demand for information by customers, manufacturers and providers alike. In
addition, PharMerica's long term care pharmacies and its workers' compensation
business as well as ASD's specialty healthcare offerings of oncology, vaccines
and biotech products, which are a part of Bergen's portfolio of businesses, will
enhance AmeriSource-Bergen's position in healthcare services by providing
greater depth of product offerings.
AmeriSource and Bergen are each well recognized for their effective utilization
of technology in the operations and customer based systems. This expertise will
serve the combined company well and permit the enhancement of software systems
and result in improved order-entry, inventory management systems and other
information solutions designed to meet customer needs. The combined company will
be able to more effectively channel information systems resources to develop new
and innovative offerings as a single operating system emerges.
We expect the trend of fierce competition to continue among the members of the
drug wholesaling industry as efficiencies have historically translated into cost
concessions that benefit the customers we serve. As there are significant
efficiencies associated with this merger to the benefit of our customers, you
can expect our competition to raise concerns about the merger. We believe our
competitors recognize the industry dynamics and their view of the merger will
grow out of concern about the intensified and more difficult competitive
environment created by a combined firm that is more efficient with a lower cost
structure.
As we embark on this significant event in our corporate history, we trust we can
count on your continued support and confidence.
********
ATTACHMENT V
CUSTOMER DISCUSSION POINTS
I. The Merger Will Produce Substantial Operating Efficiencies and Cost Savings
The combination will generate substantial operating efficiencies and reduce
operating costs for the combined company savings much more quickly than either
party could achieve independently. After the merger, the combined firm will
consolidate volume in newly constructed or expanded distribution centers,
achieving increased efficiencies and additional cost savings.
The result will be a highly efficient network of high-volume, state-of-the-art
distribution centers that can profitably service all regions currently served by
Bergen and AmeriSource at a lower cost resulting in savings that can be shared
with customers. This is an industry with a proven track record of lowering
prices when efficiencies are achieved by eliminating costs and achieving
economies of scale.
II. The Merger will Enable the Establishment of Larger and More Sophisticated
Purchasing and Support Programs with Manufacturers
A combined Bergen/AmeriSource will be able to establish larger and more
sophisticated purchasing and support programs with pharmaceutical manufacturers
designed to further reduce costs in the pharmaceutical delivery channel
III. The Merger will Result in the Enhancement and Further Development of a
Wide Range of Programs and Services For All Customer Segments
The combined company's software systems, order-entry and customer inventory
management systems, hospital pharmacy automation systems, and third party
transaction processing systems will be will be enhanced as a result of the
merger. While we recognize you currently have a variety of sources to obtain all
the services we provide you, after the merger you will have an expanded offering
of ancillary services.
IV. Post-Merger Industry Will Remain Fiercely Competitive
You can expect that our competitors and others may attempt to create concerns
about the merger. We believe that the creation of a more efficient wholesaler
will continue to stimulate fierce competition among all members of the drug
wholesaling industry. As for our competitors, they are not looking forward to
the intensified and more difficult competitive environment they will face when
the merger is completed, and they have to compete with a lower-cost, more
efficient combined firm.
V. Request the Customer's Support of the Transaction
We hope to count on your support for the transaction. [If reaction is positive]:
We would ask that you promote the merger to others within your organization.
********
ATTACHMENT VI
SUPPLIER DISCUSSION POINTS
I. Establishment of Larger and More Sophisticated Purchasing Programs
A combined AmeriSource/Bergen will be able to establish larger and more
sophisticated manufacturer support programs. These programs will help drive
customer and patient formulary compliance and present significant additional
sales volume opportunities for your organization.
II. The Merger Will Produce Substantial Efficiencies
The combination will generate substantial operating efficiencies and reduce
operating costs for the combined company beyond savings that either party could
achieve independently. After the merger, the combined firm will consolidate
volume in newly constructed or expanded distribution centers, achieving
increased efficiencies and additional cost savings.
The result will be a highly efficient network of high-volume, state-of-the-art
distribution centers that can profitably service all regions currently served by
AmeriSource and Bergen at a lower cost resulting in savings that can be shared
with customers.
This is an industry with a proven track record of lowering prices when
efficiencies are achieved by eliminating costs and achieving economies of scale.
III. The Merger will Result in the Enhancement and Further Development of a
Wide Range of Programs and Services For All Customer Segments
The combined company's software systems, improved order-entry and customer
inventory management systems, hospital pharmacy automation systems, third party
transaction processing systems, and manufacturer market share/sales data systems
will be enhanced as a result of the merger.
IV. Post-Merger Industry Will Remain Fiercely Competitive
We believe that creation of a more efficient wholesaler will continue to
stimulate fierce competition among all members of the drug wholesaling industry
and ensure that our mutual customers obtain and distribute your products in the
most efficient manner possible.
V. Request the Supplier's Support of the Transaction
We hope to count on your support for this transaction. [If reaction is
positive]: We would ask that you promote the merger to others within your
organization. If at any time you want to discuss the transaction and the
potential effect on your organization or the industry in general, please call us
and we'll be happy to share with you whatever details we can.
********
ATTACHMENT VII
CUSTOMER Q & A
1. I've seen the way companies go through consolidations, I'm sure that the
systems portion will be a nightmare, won't it?
Response: System conversions and consolidations almost always take longer than
we would like. However, we have gained experience with each of our previous
acquisitions which have involved systems conversions and our IS group has become
quite skilled at this process. We believe that the final product has always been
an improvement in our information systems, whether operating systems in the
Distribution Center or Customer Systems. Our goal will be to take the best that
both companies have to offer and create information systems that are the best in
the industry.
2. You talked about reducing costs and increasing productivity, does that
mean you will be eliminating or reducing customer service representatives
and other personnel?
Response: The combination of Bergen Brunswig and AmeriSource will result in
greater efficiencies and lower costs, but not at the expense of a reduction or
elimination of existing services. We do expect to eliminate duplicate resources,
but it is our intention to ensure that our customers receive the same or better
service from the combined company. After all, if you don't receive equal or
better service from the combined firm, we would expect you to move your business
elsewhere.
3. This concerns me. You will be removing a competitor and my prices,
especially my generic prices, will be going up.
Response: We believe the environment will continue to be very competitive. You
will still have many alternatives to choose from, including other wholesalers,
direct distribution and mail order. These other wholesalers and alternate
distribution channels will continue to compete for your business, but we intend
to retain you as a customer for years to come and that means offering
competitive pricing. As far as generics, we think that the combined company will
be a larger buyer of generics. This will allow us to make better deals with
those generic companies who are desirous of greater volume. That means we will
have enhanced purchasing programs with better pricing for you.
4. The two companies are so different, how can you say to me that this will
work out smoothly?
Response: The two companies actually share many similarities in regard to our
core distribution business strategies. We are both focused on the continued
development of more efficient delivery systems and value-added programs for our
customers. We believe the merger will create an opportunity to blend the best
characteristics of both organizations, which should result in the development of
innovative solutions for our customers.
5. When will I see all of the benefits that you are talking about?
Response: The merger requires shareholder approval of both companies and other
customary approvals. We anticipate that this process will take several months.
During that time, both organizations will continue to operate independently and
compete for the same business just as they have prior to this announcement.
After the merger is consummated, we'll be able to share with you the benefits
that we believe will arise out of the merger.
6. I use you both now, one as a primary and one as a secondary. I want you to
give me a price on the combined volume now.
Response: The merger requires shareholder and other customary approvals. We
anticipate that this process will take several months. During that time, both
organizations will continue to operate independently and compete for the same
business, just as they have prior to this announcement. After the merger is
consummated, we'll be able to share with you our plans for consolidations and
other benefits that we believe will arise out of the merger.
7. Will my Bergen system be changed to something else?
Response: Not in the foreseeable future. We will continue to support the Bergen
platform. Eventually, our goal with the combined companies is to take the best
that both have to offer and create systems for our customers that are the best
in the industry. In order to accomplish this, we'll be talking with our
customers and soliciting their feedback on system specifics.
8. This is a big project for your company. I'm concerned that your service
will go down so I better get a secondary/co-prime vendor.
Response: Our service levels to you will not be adversely affected by the
merger. To the contrary, the primary reason for doing this merger is to create a
highly efficient distribution system that can provide improved service at a
lower cost resulting in further savings and service enhancements that can be
shared with our customers. We are and will continue to be focused on providing
quality service to our customers. Once the merger is consummated, we expect to
implement the best practices from both companies and anticipate that you will
receive equal or better service.
9. How will you be bringing the programs of Bergen and AmeriSource together?
Response: The merger requires shareholder and other customary approvals. We
anticipate that this process will take several months. During that time, both
organizations will continue to operate independently and compete for the same
business, just as they have prior to this announcement. However, there will be
people reviewing things such as best practices of each company and developing
plans for the combined companies. Once the merger is consummated, we'll be able
to respond more specifically to your request.
10. Is this a merger or an acquisition?
Response: It is a merger and the creation of a new company, AmeriSource-Bergen
Corporation.
11. I'm a Good Neighbor store and I do not want to change to another program.
Response: The merger requires shareholder and other customary approvals. We
anticipate that this process will take several months. During that time, both
organizations will continue to operate independently and compete for the same
business, just as they have prior to this announcement. This means that there
will be no definitive decisions made about program offerings until the merger is
consummated. I can tell you that when the time is right, we'll be talking to
customers and soliciting feedback in order to develop the best programs for the
Retail Independent. Both companies have focused on programs which are designed
to support the continued success of the Independent and that will be the focus
of the combined company
12. In my market, Bergen and AmeriSource are the two main wholesalers. By
merging, you are reducing the competitive environment.
Response: There are several strong alternate wholesalers whom we expect will
enter the market and provide competition. We aren't naive enough to believe they
will resist the opportunity to increase their presence in this market. That's
why we will be certain to continue to provide high quality service and highly
competitive pricing.
13. Isn't the FTC going to look at this? What makes you believe they will
allow this merger?
Response: We expect that the FTC will review this transaction as a matter of
routine course. We do not believe that the FTC will challenge it because, in our
analysis, this transaction does not reduce competition and does not violate
antitrust laws. This merger differs from the proposed combinations in 1998,
primarily because the combination of companies is different today and the nature
of competition within the wholesale drug industry is different today than in
1998. In addition, key customers have expressed strong support for the
AmeriSource-Bergen merger.
********
ATTACHMENT VIII
DRUG SUPPLIER LETTER
To Our Valued Trading Partners,
You have probably already received the news of the pending merger of Bergen
Brunswig and AmeriSource. We are extremely excited about this transaction and
would like to take this opportunity to provide you with some information
concerning the formation of this new company called AmeriSource-Bergen
Corporation. I am sure this move comes as a surprise but I think you will agree
we are creating a company that will play an important role in the healthcare
industry throughout this century.
AmeriSource-Bergen Corporation will offer attractive capabilities to all venues
of care that include drug distribution, clinical and operational information
services, packaging, automation, outsourcing, contracting administration and
pharmacy and formulary management. In addition the combined organizations will
be focused on providing programs and services that are designed to drive market
share for its valued trading partners. In short, this combination will create an
efficient healthcare supply chain management company well positioned to
successfully compete in today's competitive marketplace.
Specifically, we will continue to support your company and intend to provide
even more sophisticated manufacturer programs that will drive customer and
patient compliance, marketing programs designed to drive share in addition to
significant sales volume. The high volume state of the art distribution,
packaging, and outsource networks will provide efficient high quality service
for all of our customers and supplier partners.
We anticipate the transaction will close sometime in the summer of calendar
2001. Please continue to work with your same contact person at Bergen Brunswig
concerning any decisions or information regarding your products or service. If
you have any questions or concerns please feel free to contact me at any time at
(714)385-4146. Thank you for your continued partnership and support. We look
forward with great anticipation to the new AmeriSource-Bergen Corporation
providing you with exciting opportunities for increased efficiency and cost
reduction, and enhanced market share opportunities.
Sincerely,
Douglas E. Batezel
Chief Procurement Officer
Bergen Brunswig Drug Company
********
ATTACHMENT IX
Forward-Looking Statements
The foregoing communications contain certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are based on management's
current expectations and are subject to uncertainty and changes in
circumstances. Actual results may vary materially from the expectations
contained in the forward-looking statements. The forward-looking statements
herein include statements addressing future financial and operating results of
AmeriSource and Bergen Brunswig and the timing, benefits and other aspects of
the proposed merger.
The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: inability to
obtain, or meet conditions imposed for, governmental approvals for the
transaction; failure of the stockholders of AmeriSource and Bergen Brunswig to
approve the merger; the risk that the businesses of AmeriSource and Bergen
Brunswig will not be integrated successfully; failure to obtain and retain
expected synergies; and other economic, business, competitive and/or regulatory
factors affecting the businesses of AmeriSource and Bergen Brunswig generally.
More detailed information about these factors is set forth in AmeriSource's and
Bergen Brunswig's filings with the Securities and Exchange Commission, including
each of their Annual Reports on Form 10-K for fiscal 2000 and their most recent
quarterly reports on Form 10-Q. AmeriSource and Bergen Brunswig are under no
obligation to (and expressly disclaim any such obligation to) update or alter
their forward-looking statements whether as a result of new information, future
events or otherwise.
Additional Information
In connection with their proposed merger, AmeriSource and Bergen Brunswig will
file a joint proxy statement/prospectus with the Securities and Exchange
Commission. Investors and security holders are advised to read the joint proxy
statement/prospectus when it becomes available, because it will contain
important information. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus (when available) and other documents filed
by AmeriSource and Bergen Brunswig at the Securities and Exchange Commission's
web site at www.sec.gov. The joint proxy statement/prospectus and such other
documents may also be obtained for free from AmeriSource or from Bergen Brunswig
by directing such request to AmeriSource Health Corporation, General Counsel,
1300 Morris Drive, Suite 100, Chesterbrook, Pennsylvania 19087-5594, Telephone:
(610) 727-7000; or to Bergen Brunswig Corporation, Attention: Corporate
Secretary, 4000 Metropolitan Drive, Orange, California 92868-3510, Telephone:
(714) 385-4000.
Participants in Solicitation
AmeriSource and Bergen Brunswig and their respective directors, executive
officers and other members of their management and employees may be deemed to be
participants in the solicitation of proxies from their respective stockholders
in connection with the proposed merger. Information concerning AmeriSource's
participants in the solicitation is set forth in AmeriSource's Current Report on
Form 8-K filed with the Securities and Exchange Commission on March 19, 2001,
and information concerning Bergen Brunswig's participants in the solicitation is
set forth in Bergen Brunswig's Current Report on Form 8-K filed with the
Securities and Exchange Commission on March 19, 2001.