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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): October 3, 1996
FOXMEYER HEALTH CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8549 25-1425889
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(Commission File Number) (I.R.S. Employer
Identification No.)
1220 Senlac Drive, Carrollton, Texas 75006
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(Address of Principal Executive Offices) (Zip Code)
(214) 446-4800
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
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FoxMeyer Health Corporation ("Fox Health") and its
subsidiaries that are engaged in the healthcare distribution business
entered into an Asset Purchase Agreement, dated as of October 3, 1996
(the "Asset Purchase Agreement"), with McKesson Corporation
("McKesson"). Pursuant to the terms of the Asset Purchase Agreement,
FoxMeyer Corporation, FoxMeyer Drug Company ("Fox Drug"), Health Mart,
Inc., FoxMeyer Software, Inc., FoxMeyer Funding, Inc., Healthcare
Transportation System, Inc. and Merchandise Coordinator Services
Corporation have agreed to sell substantially all of their assets to
McKesson. As a result, McKesson will acquire substantially all of the
assets and assume certain of the liabilities relating to the
healthcare distribution business of Fox Health.
Reference is hereby made to the Press Release, dated October
4, 1996, issued by Fox Drug, which is attached hereto as Exhibit 99.1
and is incorporated herein by reference.
Fox Health has sold to or through Gordon Capital Corporation
and Marleau, Lemire Securities Inc. (the "Underwriters") 14,250,000
special warrants to acquire shares of FoxMeyer Canada Inc., a
subsidiary of Fox Health that provides health care, pharmacy and
pharmacy benefit management services in Canada ("Fox Canada"). The
issue price for each special warrant was Cdn. $4.85, and each special
warrant is convertible into one share of common stock of Fox Canada
currently owned, or subject to an option held, by Fox Health. Fox
Canada will receive Cdn. $14.4 million (U.S. $10.5 million) from the
exercise of options held by Fox Health, which will be paid from the
proceeds of the sales to or through the Underwriters.
The $50.4 million proceeds from the sale of the special
warrants have been deposited into escrow, pending the entry of a
stipulation and agreed order of the United States Bankruptcy Court in
Wilmington, Delaware presiding over the Chapter 11 proceedings of Fox
Drug and certain affiliated companies of Fox Drug. The order, which
has been approved by the official committee of unsecured creditors of
Fox Drug and the other debtors, once entered by the court, which is
expected to occur on October 15, 1996, will provide for the immediate
distribution of at least $4 million of the proceeds from the sale to
Fox Health. Of the $36.7 million total proceeds of the sale, after
the payment of the $10.5 million option exercise price to Fox Canada
and expenses of the sale, $4 million will be paid to Fox Health and
$25.2 million will be held in escrow for a 90-day period and then
may be released to Fox Health after a forty-five day notice period.
The remaining $7.5 million will be subject to a hold-back in favor
of the special warrant purchasers and will be released to Fox Health
if a prospectus of Fox Canada, which is
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to be filed in connection with sale of the special warrants, is
approved by the applicable Canadian regulatory authorities by January
30, 1997.
A portion of the special warrants were offered and sold in
Canada in reliance upon Regulation S under the Securities Act of 1933
and a portion of the special warrants were offered and sold by United
States affiliates of the Underwriters in the United States to
"qualified institutional buyers" in reliance upon, and in compliance
with the requirements of, Rule 144A under the Securities Act of 1933.
Reference is hereby made to the Press Release, dated October
7, 1996, issued by Fox Health, which is attached hereto as Exhibit
99.2 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
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(c) Exhibits.
99.1 Press Release, dated October 4, 1996, issued by
FoxMeyer Drug Company.
99.2 Press Release, dated October 7, 1996, issued by
FoxMeyer Health Corporation
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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.
FOXMEYER HEALTH CORPORATION
(Registrant)
DATE: October 8, 1996 By: /s/ Edward L. Massman
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Edward L. Massman
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description Page No.
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99.1 Press Release, dated October 4, 1996,
issued by FoxMeyer Drug Company.
99.2 Press Release, dated October 7, 1996,
issued by FoxMeyer Health Corporation.
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EXHIBIT 99.1
Contact: Sitrick And Company
Sandra Sternberg
Ann Julsen
(310) 788-2850
FOR IMMEDIATE RELEASE
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FOXMEYER'S HEALTHCARE DISTRIBUTION BUSINESS TO BE SOLD TO MCKESSON
AGREEMENT PROVIDES FOXMEYER WITH CAPACITY TO PURCHASE UP TO
$100 MILLION IN ADDITIONAL INVENTORY
DALLAS, TEX. -- OCTOBER 4, 1996 -- FoxMeyer Drug Company
today announced that it and its affiliated companies engaged in the
healthcare distribution business have reached an agreement to sell
substantially all of their assets to McKesson Corporation (NYSE:MCK),
a provider of health care products and services throughout the U.S.
and Canada. McKesson will pay $80 million in cash subject to certain
adjustments relating to future financial targets and the sellers'
reaching agreements with certain trade vendors relating to chargeback
claims. The agreement is subject to the satisfaction of certain
conditions, including the expiration of waiting periods under the
Hart-Scott-Rodino Act, approval of the agreement by the Bankruptcy
Court pursuant to section 363 of the Bankruptcy Code, obtaining
agreements from vendors relating to their honoring a certain level of
post-petition chargeback claims and FoxMeyer's satisfaction of certain
targets for sales, financial performance and accounts receivables
collections. In addition, McKesson has agreed to discharge FoxMeyer's
obligations under its debtor-in-possession financing package with GE
Capital Services and to assume substantially all other liabilities of
the Company other than pre-petition trade debt.
As part of the agreement, McKesson will provide $30 million
to FoxMeyer through a participation in the Company's existing debtor-
in-possession financing with GE Capital Services. These funds will
provide further borrowing availability under that agreement and will
facilitate the purchase of approximately $100 million of additional
inventory.
FoxMeyer Drug Company and its affiliates are wholly-owned
subsidiaries of FoxMeyer Health Corporation (NYSE:FOX). After the
consummation of the proposed sale, FoxMeyer Health will have no
further involvement in the healthcare distribution business, which
FoxMeyer Health has treated, for accounting purposes, as a
discontinued operation since its June 30, 1996, quarterly financial
statements.
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Robert A. Peiser, vice chairman and chief executive officer
of FoxMeyer Drug, said "By agreeing to the sale to McKesson, we have
endeavored to achieve the best possible resolution for all of our
constituencies consistent with our obligation to maximize creditors'
recoveries. We believe that the sale to McKesson is the best
alternative available to us to achieve these goals."
Mr. Peiser added, "Pending completion of the sale, the
agreement with McKesson will put us in an even stronger position to
satisfy our obligations to customers -- including the timely supply of
healthcare products -- and, in doing so, to provide the highest levels
of customer service."
"At the same time, we are very sensitive about the future
welfare of our employees. A major consideration in reaching this
agreement was that we would be able to preserve as many jobs as
possible. While decisions regarding employment after the sale is
completed will be up to McKesson, we have been assured that they will
give fair consideration to all our employees."
The agreement will be filed with the Bankruptcy Court in
Wilmington, Del. today. Under the Bankruptcy Code, the agreement is
subject to an open-bidding process. As a result, it is possible that
other bidders may come forward offering to purchase the same or other
assets. The proceeds from the sale transaction will be used to
discharge liabilities and satisfy creditors' claims in the Chapter 11
cases of FoxMeyer Drug and certain of its affiliated companies.
Mr. Peiser said that FoxMeyer Drug will continue to operate
its warehouses and distribution facilities, sales and administrative
offices until the sale is completed, which is expect to occur sometime
in November.
FoxMeyer Drug and certain affiliated companies filed to
reorganize under Chapter 11 of the Bankruptcy Code on August 27, 1996,
in U.S. Bankruptcy Court in Wilmington, Del. FoxMeyer Drug is the
nation's fourth largest wholesaler of pharmaceutical products, health
and beauty aids. The Company, which is headquartered in Dallas,
employs approximately 2,200 people in 21 states and the District of
Columbia.
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EXHIBIT 99.2
Contacts: Morgen-Walke Associates
Betsy Brod/Alex Gleeson
(212) 850-5600
FOR IMMEDIATE RELEASE
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FOXMEYER HEALTH CORPORATION COMPLETES THE SALE OF ITS
INTEREST IN FOXMEYER CANADA INC.
DALLAS, TX - October 7, 1996 -- FoxMeyer Health Corporation
(NYSE:FOX) today announced that the Company has completed the
previously announced sale of its interest in FoxMeyer Canada Inc. to
Gordon Capital Corporation and Marleau, Lemire Securities Inc., as
underwriters. Under the terms of the sale, FoxMeyer Health issued to
the underwriters 14.25 million special warrants with a purchase price
of C$4.85 per warrant, each of which is convertible into one share of
common stock of FoxMeyer Canada Inc. currently owned by or subject to
an option held by FoxMeyer Health Corporation. FoxMeyer Canada will
receive C$14.4 million (US $10.5 million) from the exercise of options
held by FoxMeyer Health Corporation, which will be paid from the
proceeds of the sale to the underwriters.
The $50.4 million proceeds from the sale have been deposited
into escrow, pending the entry of a stipulation and agreed order of
the United States Bankruptcy Court presiding over the Chapter 11
proceedings of FoxMeyer Health's wholly-owned subsidiary, FoxMeyer
Drug Company. The order, which has been approved by the creditors'
committee in the Chapter 11 proceedings, once entered by the court
which is expected to occur on October 15, 1996, will provide for the
immediate distribution of at least $4 million of the proceeds from the
sale to FoxMeyer Health. The proceeds total approximately $36.7
million after the payment of the $10.5 million option exercise price
and expenses of the sale. Of the $36.7 million total, $4 million will
be paid to FoxMeyer Health, $25.2 million will be held in escrow for a
90-day standstill period and then may be released after a forty-five
day notice period. The remaining $7.5 million will be subject to a
hold-back in favor of the special warrant purchasers. The $7.5
million hold-back will be released if a prospectus of FoxMeyer Canada,
to be filed in connection with the sale of the special warrants, is
receipted by the applicable Canadian regulatory authorities no later
than January 30, 1997.
Separately, since the announcement of its proposed sale of
its US HealthData Interchange, Inc. subsidiary to FoxMeyer Canada,
FoxMeyer Health has received several inquiries from other possible
buyers and is in discussions with all parties regarding the sale.
FoxMeyer Health Corporation is a leading provider of health
care products and information-based services in North America.
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