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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)
_____________________________________
MEDICINE SHOPPE INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-13008 43-0950846
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1100 North Lindbergh Boulevard, St. Louis, Missouri 63132
(Address of principal executive offices) (Zip Code)
(314) 993-6000
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On August 28, 1995, Medicine Shoppe International, Inc. ("MSI")
announced that it had entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Cardinal Health, Inc. ("Cardinal") providing for the merger of
a wholly-owned subsidiary of Cardinal established for such purpose with and
into MSI. Pursuant to the Merger Agreement, MSI, as the surviving corporation
in the merger, will become a wholly-owned subsidiary of Cardinal. A copy of
MSI'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
this reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements - not applicable
(b) Pro Forma Financial Information - not applicable
(c) Exhibits - See Exhibit Index on page 4 hereof.
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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.
Date: August 31, 1995
MEDICINE SHOPPE INTERNATIONAL, INC.
By: /s/ Donald C. Schreiber
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Vice-President and Chief Financial Officer
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EXHIBIT INDEX
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Exhibit No. Exhibit
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99.1 Press Release dated August 28, 1995
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[THE MEDICINE SHOPPE LETTERHEAD]
Medicine Shoppe International, 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. pharmaceutical 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 Cardinal 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's common stock of $55.00 per share, Cardinal would
issue approximately 6.335 million common shares representing a transaction
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 subject to, among other things, approval by the shareholders of
Medicine Shoppe and the receipt of appropriate regulatory approvals. This
combination has been structured as a tax-free reorganization and will be
accounted for as a pooling of interests.
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, alternate
care centers, and the pharmacy departments of supermarkets 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 compound
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
franchisees operating 109 pharmacies in seven foreign countries. Approximately
94% of the sales from Medicine Shoppe's apothecary-style stores are derived
from prescriptions. Medicine Shoppe provides the pharmacist/franchisee with a
comprehensive 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
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$16.0 million, and earnings per share of $2.06. Sales reported by Medicine
Shoppe(R) 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 Robert 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 combination of value-added information, marketing and educational services to
its customers. This merger with Medicine Shoppe creates numerous networking
opportunities for all Cardinal customer 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 will enable us to broaden further the range of programs offered and
options available to Medicine Shoppe(R) franchisees, Cardinal's retail
customers, and other customer segments as local integrated health networks
continue to develop. Furthermore, 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 shareholders, 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 structure and management philosophy will enable our
company to continue 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 Medicine 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 operations. 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 serve in their current
positions, and the company's headquarters will remain in St. Louis.
