SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 28, 1997
(Date of Earliest Event Reported)
MCKESSON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-13252 94-3207296
(State or other (Commission File Number) (IRS Employer
jurisdiction Identification
of incorporation) Number)
McKesson Plaza, One Post Street, San Francisco, CA 94104
(Address of principal executive offices, including Zip Code)
(415) 983-8300
(Registrant's telephone number, including area code)
Item 5 - Other Events.
McKesson Corporation ("McKesson"), General
Medical Inc. ("General Medical") and certain stockholders
of General Medical (the "Continuing Stockholders")
entered into an Agreement and Plan of Merger, dated as of
January 28, 1997 (the "Merger Agreement"), pursuant to
which McKesson will acquire all of the outstanding
capital stock (including options) of General Medical for
approximately $347 million. McKesson will also assume
approximately $428 million in debt of General Medical.
The Merger Agreement, which has been approved by the
Boards of Directors of each company and by the
stockholders of General Medical, provides for the merger
(the "Merger") of Spider Acquisition Corporation, a
wholly owned subsidiary of McKesson ("Merger Sub"), with
and into General Medical, with General Medical being the
surviving corporation in the Merger.
The Merger Agreement provides that each share
of General Medical common stock held by the Continuing
Stockholders will be converted into the right to receive
a combination of cash and shares of McKesson common
stock, par value $.01 per share (the "McKesson Common
Stock"), pursuant to formulas specified in the Merger
Agreement. The issued and outstanding shares of capital
stock held by stockholders of General Medical other than
the Continuing Stockholders (and other than dissenting
shares, treasury shares and shares held by McKesson or
Merger Sub) will be converted in the Merger into the
right to receive cash. Approximately one-half of the
aggregate Merger consideration will be paid in cash and
one-half in shares of McKesson Common Stock. The Merger
Agreement provides that the number of shares of McKesson
Common Stock to be issued in the Merger will be
determined on the basis of the average closing price of
McKesson Common Stock for the five trading days ending
two trading days prior to the closing; provided, however,
that the average closing price of McKesson Common Stock
will not be deemed to be greater than $63.11 or less than
$46.64. Accordingly, in the aggregate, no more than
approximately 3,720,000 or less than approximately
2,750,000 shares of McKesson Common Stock will be issued
in the Merger. The Merger Agreement provides that $30
million of the cash consideration to be paid in the
Merger will be held back from the General Medical
stockholders (and optionholders) and such amount will be
applied against any costs incurred by General Medical and
certain other defendants in connection with a pending
lawsuit involving General Medical and certain other
persons. The lawsuit was brought by the former
controlling shareholder of the predecessor of General
Medical against General Medical, GM Holdings, Inc., a
wholly owned subsidiary of General Medical, Kelso &
Company, L.P., a stockholder of General Medical, and one
of its officers, and certain present and former officers
and a director of General Medical, alleging fraud, breach
of fiduciary duty and participation in and inducing
breach of fiduciary duty in connection with the
acquisition of General Medical from its predecessor
company in 1993.
The Merger is subject to certain customary
conditions, including expiration of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended. Copies of the Merger Agreement and the
press release announcing the transaction are attached
hereto as Exhibits 2.1 and 99.1, respectively, which
exhibits are incorporated herein by reference.
McKesson and the Continuing Stockholders have
also entered into a Registration Rights Agreement (the
"Registration Rights Agreement") providing certain demand
and incidental registration rights with respect to the
shares of McKesson Common Stock which such stockholders
will receive in exchange for their shares of General
Medical common stock. The Registration Rights Agreement
also provides for certain "standstill" provisions and
other limitations on disposition of the shares of
McKesson Common Stock. A copy of the Registration Rights
Agreement is attached hereto as Exhibit 99.2, which
exhibit is incorporated herein by reference.
The Private Securities Litigation Reform Act of
1995 provides a "safe harbor" for forward-looking
statements to encourage companies to provide prospective
information about companies, so long as those statements
are identified as forward looking and are accompanied by
meaningful cautionary statements identifying important
factors that could cause actual results to differ
materially from those discussed in the statement. The
press release filed herewith contains certain forward-
looking statements. McKesson desires to take advantage
of the "safe harbor" provisions with respect to
statements it may make concerning the Merger. The
following important factors, among others, could affect
the successful integration of the companies and the
recognition of cost savings or other synergies from the
transaction, as well as McKesson's continuing operations:
Factors specific to the transaction include:
- Absence of legislation which prevents the Merger
from being consummated or makes the benefits expected to
be realized upon consummation of the Merger more
difficult to achieve.
- Possible adverse publicity or litigation from
third parties interested in preventing the Merger from
occurring.
- Loss or retirement of key executives of General
Medical.
Other factors affecting McKesson's operations include:
- Level of competition for McKesson's products,
including a possible willingness on the part of certain
competitors to cut prices for their products in order to
preserve or gain market share.
- Increase in spending by competitors.
- Risks inherent in new product introductions,
including uncertainty of customer acceptance of the
product's value proposition relative to competitors'
products, and competitors' response to the introduction.
- General economic and business conditions.
- Uncertainty in the economic environment in foreign
countries.
- Other risks detailed from time to time in
McKesson's filings with the Securities and Exchange
Commission.
The foregoing review of factors pursuant to the
Private Litigation Securities Reform Act of 1995 should
not be construed as exhaustive.
Item 7(c) - Exhibits.
2.1 Agreement and Plan of Merger, dated as of
January 28, 1997, by and among General Medical
Inc., McKesson Corporation, Spider Acquisition
Corporation and certain stockholders named
therein.
99.1 Press Release of McKesson Corporation, dated
January 28, 1997.
99.2 Registration Rights Agreement, dated as of
January 28, 1997, by and among McKesson
Corporation and certain stockholders named
therein.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
MCKESSON CORPORATION
(Registrant)
Date: February 5, 1997 By: /s/ Nancy A. Miller
--------------------------
Name: Nancy A. Miller
Title: Vice President and
Corporate Secretary
EXHIBIT INDEX
Exhibit Page
2.1 Agreement and Plan of Merger, dated as of
January 28, 1997, by and among General Medical
Inc., McKesson Corporation, Spider Acquisition
Corporation and certain stockholders named
therein.
99.1 Press Release of McKesson Corporation, dated
January 28, 1997.
99.2 Registration Rights Agreement, dated as of
January 28, 1997, by and among McKesson
Corporation and certain stockholders named
therein.