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
August 26, 1995
Date of Report (Date of earliest event reported)
Cardinal Health, Inc.
(Exact name of Registrant as specified in its charter)
Ohio 0-12591 31-0958666
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
655 Metro Place South, Suite 925, Dublin, Ohio 43017
(Address of principal executive offices) (Zip Code)
(614) 761-8700
(Registrant's telephone number, including area code)<PAGE>
Item 5. Other Events
On August 28, 1995, Cardinal Health, Inc., an Ohio
corporation ("Cardinal") announced that Cardinal, Arch Merger
Corp., a Delaware corporation and wholly owned subsidiary of
Cardinal ("Merger Sub"), and Medicine Shoppe International,
Inc., a Delaware corporation ("MSI"), had entered into an
Agreement and Plan of Merger (the "Merger Agreement").
Pursuant to the Merger Agreement and subject to the terms and
conditions set forth therein, and among other things, Merger
Sub will be merged with and into MSI, as a result of which
MSI will become a wholly-owned subsidiary of Cardinal. A
copy of Cardinal's press release dated August 28, 1995
announcing the execution of the Merger Agreement is filed as
Exhibit 99.1 hereto and is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Informa-
tion and Exhibits
The following exhibits are filed with this report:
99.1 Press Release dated August 28, 1995.<PAGE>
SIGNATURE
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 hereto
duly authorized.
CARDINAL HEALTH, INC.
Dated: August 30, 1995 By /s/ George H. Bennett, Jr.
George H. Bennett, Jr.
Executive Vice President and
General Counsel<PAGE>
EXHIBIT INDEX
99.1 Press Release dated August 28, 1995.
[LETTERHEAD OF CARDINAL HEALTH, INC.]
CARDINAL HEALTH AND MEDICINE SHOPPE
INTERNATIONAL SIGN MERGER AGREEMENT
Dublin, Ohio, and St. Louis, Missouri, August 28,
1995 -- Cardinal Health, Inc. (NYSE: CAH), a leading U.S. phar-
maceutical distributor, and Medicine Shoppe International, Inc.
(NASDAQ: MSII), the largest franchisor of independent retail
pharmacies in the U.S., jointly announced today that they have
signed a definitive agreement with respect to a merger in which
Medicine Shoppe will become a wholly-owned subsidiary of Cardi-
nal Health.
Under the terms of the transaction, shareholders of
Medicine Shoppe will receive $45.00 in the form of Cardinal
Health common stock for each common share of Medicine Shoppe,
so long as the market price of Cardinal stock is between $51.58
and $58.17 (based upon the average closing prices thereof over
a specified period). Depending on the price of Cardinal
Health's common stock, the number of shares Cardinal will issue
in the transaction ranges from approximately 5.990 million to
6.755 million. Based upon the current market price of Cardinal
Health common stock of $55.00 per share, Cardinal would issue
approximately 6.335 million common shares representing a trans-
action value of approximately $348 million.
If the price of Cardinal Health common stock is a
certain level below $51.58, Cardinal has the option to issue
additional shares to eliminate the right of Medicine Shoppe not
to close the transaction in such event. In connection with the
transaction, Medicine Shoppe has granted Cardinal an option to
purchase 1.3 million common shares at a price of $39.00 per
share, exercisable upon the occurrence of certain events. The
merger, which is expected to be completed in late 1995, is sub-
ject to, among other things, approval by the shareholders of
Medicine Shoppe and the receipt of appropriate regulatory ap-
provals. This combination has been structured as a tax-free<PAGE>
Cardinal Health/Merger Agreement
Page 2
reorganization and will be accounted for as a pooling of inter-
ests.
Cardinal Health, Inc., based in Dublin, Ohio, is a
leading pharmaceutical distributor in the United States. The
company provides an array of innovative, value-added services
to a broad base of customers nationwide including hospitals,
independent and chain pharmacies, managed care facilities, al-
ternate care centers, and the pharmacy departments of supermar-
kets and mass merchandisers. The company reported sales of
$7.8 billion, net income, of $85.0 million, and earnings per
share of $2.01 for its fiscal year ended June 30, 1995. Over
the last five years, the company has experienced annual com-
pound growth rates in sales and earnings per share of 29.6% and
39.5%, respectively.
Medicine Shoppe International, Inc., headquartered in
St. Louis, Missouri, is the largest franchisor of independent
retail pharmacies in the United States. The company currently
has 987 franchisee locations in 46 states, and also has fran-
chisees operating 109 pharmacies in seven foreign countries.
Approximately 94% of the sales from Medicine Shoppe's
apothecary-style stores are derived from prescriptions. Medi-
cine Shoppe provides the pharmacist/franchisee with a compre-
hensive system of business training, site location, marketing
and advertising programs, purchasing and managed care programs,
and management support designed to help the franchisee build a
successful business. For the twelve months ended June 30,
1995, the company reported revenues of $53.8 million, net
income of $16.0 million, and earnings per share of $2.06.
Sales reported by Medicine Shoppe pharmacies over the same
twelve month period totaled $923 million. The company has
grown revenues and earnings per share at annual compound rates
of 12.1% and 15.1%, respectively, over the last five fiscal
years.
"This is a very exciting step for us," commented Rob-
ert D. Walter, chairman and chief executive officer of Cardinal
Health, Inc. "Over the years, Cardinal Health has moved beyond
the purely logistical side of drug wholesaling to offer a com-
bination of value-added information, marketing and educational
services to its customers. This merger with Medicine Shoppe
creates numerous networking opportunities for all Cardinal cus-
tomer segments in the new areas of information and cognitive
services provided by pharmacists."
"Medicine Shoppe runs an excellent operation with a
proven formula for success in the retail pharmacy marketplace,"
added John C. Kane, president and chief operating officer of
Cardinal Health, Inc. "Our affiliation with Medicine Shoppe<PAGE>
Cardinal Health/Merger Agreement
Page 3
will enable us to broaden further the range of programs offered
and options available to Medicine Shoppe franchisees,
Cardinal's retail customers, and other customer segments as
local integrated health networks continue to develop. Further-
more, our combined companies will significantly improve
Cardinal's ability to support the marketing and distribution
needs of our suppliers."
"We are extremely enthusiastic about this merger with
Cardinal Health," stated David A. Abrahamson, president and
chief executive officer of Medicine Shoppe International, Inc.
"Both of our companies have been innovators in their respective
businesses. The combination of our efforts will magnify this
innovative spirit benefiting our franchisees, customers, and
suppliers as we continue to develop new pharmacy services and
find ways to drive down costs within the health care system.
We believe the transaction is very favorable for our sharehold-
ers providing them with an interest in a solid, rapidly growing
company with a proven track record."
Mr. Abrahamson continued, "Cardinal Health is the
ideal partner for Medicine Shoppe. Its organizational struc-
ture and management philosophy will enable our company to con-
tinue to operate as a separate entity. At the same time, our
combined companies will enjoy the benefits of shared knowledge
and resources."
"Even without considering the substantial marketing
and information synergies that we believe to exist between our
two organizations, this will be a non-dilutive transaction,"
Mr. Walter emphasized. "Additionally, both Cardinal and Medi-
cine Shoppe have very strong balance sheets with ample capital.
Medicine Shoppe has no long-term debt or lines of credit, and
has financed its growth through cash flow from normal opera-
tions. This transaction will add no goodwill to Cardinal's
balance sheet, and the net debt to total capital ratio of the
combined companies is anticipated to be less than 20% at the
closing of this transaction. As a result of this capital
strength, Cardinal Health will continue to have considerable
flexibility for the consideration of additional acquisition
opportunities."
Upon the closing of this merger, Medicine Shoppe will
operate as a separate subsidiary of Cardinal Health, Inc. Mr.
Abrahamson and the other members of the company's management
team will continue to server in their current positions, and
the company's headquarters will remain in St. Louis.<PAGE>
FACT SHEET -- CARDINAL HEALTH AND MEDICINE SHOPPE
<TABLE>
<CAPTION>
CARDINAL HEALTH, INC. MEDICINE SHOPPE INTERNATIONAL, INC.
<S> <C> <C>
Headquarters: Dublin, Ohio St. Louis, Missouri
Trading Symbol: NYSE: CAH NASDAQ: MSII
Year Founded: 1971 1970
Business: A leading U.S. distributor Largest franchisor of retail
of pharmaceuticals pharmacies in the U.S.
Provides a variety of value- Pharmacies are independently
added information and mar- owned and operated
keting services to all
classes of pharmaceutical Apothecary-style stores: 94% of
customers store sales are derived from pre-
scriptions
Locations: 34 distribution centers 1,096 franchised locations, 109
nationwide of which are located outside of
the U.S.
Employees 3800 240
Fiscal Year-end June 30 September 30
Chief Executive Robert D. Walter David A. Abrahamson
Officer
Financial Highlights: (For fiscal year ended (For twelve months ended 6/30/95)
6/30/95)
Sales/Revenues $7.8 billion $53.8 million<F1>
Net Income $85.0 million $16.0 million
Earnings per Share $2.01 $2.06
5-year EPS growth 39.5% 15.1% (for last five fiscal
years)
<PAGE>
CARDINAL HEALTH, INC. MEDICINE SHOPPE INTERNATIONAL, INC.
Gross Margin/Sales 6.0% 83.1%
EBIT/Sales 2.1% 44.7%
Total Assets $1.8 billion $88.5 million
Cash & Equivalents $63.2 million $20.0 million
Long-term Debt $209.3 million -0-
Shareholders' Equity $546.4 million $83.0 million
Average Fully Diluted
Shares Outstanding 42.2 million 7.8 million
Return on Average
Shareholders' Equity 17.5% 20.3%
10-Year Total Return
to Shareholders 25.0% 13.5%
<FN>
<F1> Total Sales Reported by Medicine Shoppe Pharmacies for
the twelve month period were $923 million.
</FN>
</TABLE>
