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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
January 14, 1999
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(Date of report)
January 12, 1999
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(Date of earliest event reported)
McKESSON HBOC, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-13252 94-3207296
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(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
McKesson Plaza
One Post Street
San Francisco, California 94104
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(Address of Principal Executive Offices) (Zip Code)
(415) 983-8300
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(Registrant's telephone number, including area code)
McKesson Corporation
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
(a) On January 12, 1999, McKesson HBOC, Inc. ("McKesson" which term
shall include references to its predecessor, McKesson Corporation, as
appropriate) consummated its acquisition of HBO & Company ("HBOC"). The
transaction was closed pursuant to the Agreement and Plan of Merger (the "Merger
Agreement") dated October 17, 1998, as amended, by and among McKesson
Corporation, McKesson Merger Sub, Inc. ("Merger Sub), and HBOC. As a result of
the transaction, HBOC became a wholly owned subsidiary of McKesson. The purchase
price consisted of the issuance of approximately 177.2 million shares of
McKesson common stock valued at approximately $15.1 billion in exchange for all
the outstanding common stock of HBOC as of the date of consummation based on an
exchange ratio equal to 0.37 shares of McKesson common stock for each share of
HBOC common stock acquired. In addition, approximately 10.6 million shares were
reserved for issuance, valued at approximately $903.1 million, in connection
with the assumption of HBOC's outstanding options, warrants and employee stock
purchase plans pursuant to the Merger Agreement.
The basic terms of the Merger Agreement, the method used for determining
the amount of consideration paid by McKesson and the relationships between
McKesson and HBOC and their respective directors and executive officers were
described in the joint proxy statement/prospectus dated November 27, 1998 filed
in connection with McKesson's Registration Statement on Form S-4 (No. 333-
67299), which is incorporated herein by reference. HBOC's assets consist of
cash, receivables, inventory, property and equipment, and other tangible and
intangible assets.
The approval of the Merger Agreement and the transactions associated
with it by the stockholders of each of McKesson and HBOC and the consummation of
the merger of Merger Sub with and into HBOC (the "Merger") was announced in a
press release of McKesson dated January 12, 1999, a copy of which is filed as an
exhibit hereto.
(b) The acquisition by McKesson of shares of HBOC common stock pursuant
to the Merger Agreement is deemed the indirect acquisition of the assets of HBOC
represented thereby, including HBOC's equipment and other physical property.
HBOC utilizes such assets in the conduct of its business as a leader in
providing software solutions, technological innovation and comprehensive
services to the healthcare industry. McKesson will continue to utilize such
assets in the conduct of its business as the world's largest healthcare services
company.
ITEM 5. OTHER EVENTS.
On January 12, 1999, McKesson took a number of actions required pursuant
to the terms of the Merger Agreement. In particular, the Restated Certificate of
Incorporation of McKesson was amended to change the name of McKesson Corporation
to McKesson HBOC, Inc. A copy of the Certificate of Amendment to the Restated
Certificate of Incorporation is filed as an exhibit hereto.
In addition, the Board of Directors of McKesson adopted resolutions
by unanimous written consent that, among other things, amended the By-laws of
McKesson as required pursuant to the terms of the Merger Agreement. A copy of
the Amendment to the By-laws is filed as an exhibit hereto.
Further, prior to the effective time of the Merger, each of Mary G. F.
Bitterman, John M. Pietruski, David S. Pottruck and Robert H. Waterman, Jr.
resigned as a Director of McKesson, and Alan Seelenfreund resigned as Chairman
of the Board of Directors of McKesson. As of the effective time of the Merger,
Alfred C. Eckert III and Gerald E. Mayo were elected to serve as a Director of
McKesson until the annual meeting of stockholders for 1999; James V. Napier and
Alton F. Irby III were elected to serve as a Director of McKesson until the 2000
annual meeting; and Charles W. McCall was elected to serve as a Director of
McKesson until the 2001 annual meeting. Mr. McCall was also elected to serve as
Chairman of the Board of Directors of McKesson, and certain changes were made to
the Committees of the Board of McKesson and certain additional officers were
appointed, as further described in a press release of McKesson dated January 13,
1999, a copy of which is filed as an exhibit hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
The financial statements required to be filed were previously reported
in McKesson's Registration Statement on Form S-4 dated November 13, 1998, as
amended by Amendment No. 1 thereto dated November 27, 1998 (No. 333-67299),
which is incorporated herein by reference.
(b) Pro Forma Financial Information
The unaudited combined condensed pro forma financial statements of
McKesson and HBOC were previously reported in McKesson's Registration Statement
on Form S-4 dated November 13, 1998, as amended by Amendment No. 1 thereto dated
November 27, 1998 (No. 333-67299), which is incorporated herein by reference.
(c) Exhibits
2.1 Second Amendment Agreement to that certain Agreement and
Plan of Merger dated October 17, 1998, as amended by an
Amendment Agreement dated as of November 9, 1998
3.1 Certificate of Amendment of Restated Certificate of
Incorporation of McKesson Corporation (incorporated by
reference to Exhibit 4.3 to the Registration Statement on
Form S-8 of McKesson HBOC, Inc. (File No. 333-70501) filed
on January 12, 1999)
3.2 Amendments to By-laws of McKesson HBOC, Inc.
99.1 Press Release issued by McKesson HBOC, Inc. on
January 12, 1999
99.2 Press Release issued by McKesson HBOC, Inc. on
January 13, 1999
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 hereunto duly authorized.
Date: January 14, 1999
McKESSON CORPORATION
By: /s/ Nancy A. Miller
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Name: Nancy A. Miller
Title: Senior Vice President and
Secretary
2
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EXHIBIT INDEX
EXHIBIT
NO. TITLE
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2.1 Second Amendment Agreement to that certain Agreement and Plan of
Merger dated October 17, 1998, as amended by an Amendment Agreement
dated as of November 9, 1998.
3.1 Certificate of Amendment of Restated Certificate of
Incorporation of McKesson Corporation (incorporated by reference to
Exhibit 4.3 to the Registration Statement on Form S-8 of McKesson
HBOC, Inc. (File No. 333-70501) filed on January 12, 1999.)
3.2 Amendments to By-laws of McKesson HBOC, Inc.
99.1 Press Release issued by McKesson Corporation on January 12, 1999.
99.2 Press Release issued by McKesson HBOC, Inc. on January 13, 1999.
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EXHIBIT 2.1
SECOND AMENDMENT AGREEMENT
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THIS SECOND AMENDMENT AGREEMENT dated as of January 12, 1999, among
McKESSON CORPORATION, a Delaware corporation ("McKesson"), HBO & COMPANY, a
Delaware corporation ("HBO"), and McKESSON MERGER SUB, INC. ("Merger Sub"), a
Delaware corporation and a wholly-owned subsidiary of McKesson.
WITNESSETH:
WHEREAS, McKesson, HBOC and Merger Sub have entered into that certain
Agreement and Plan of Merger dated as of October 17, 1998, as amended by an
Amendment Agreement dated as of November 9, 1998 (the "Merger Agreement"); and
WHEREAS, the parties hereto desire to amend further the Merger
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, the parties agree as follows:
1. The last paragraph of Exhibit D to the Merger Agreement entitled
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"Surviving Corporation Directors" is hereby amended to read as follows:
"Surviving Corporation Directors
Charles W. McCall
Mark A. Pulido
Alfred C. Eckert, III
Phillip A. Incarnati
Alton F. Irby, III
M. Christine Jacobs
Gerald E. Mayo
James V. Napier
Donald C. Wegmiller"
2. Except as expressly provided in this Amendment Agreement, all of the
terms and conditions of the Merger Agreement shall remain in full force and
effect and not be altered or amended hereby.
3. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
4. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflict of laws thereof.
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IN WITNESS WHEREOF, HBO, McKesson and Merger Sub have caused this
Amendment Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
HBO & COMPANY
By: /s/ Jay M. Lapine
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Name: Jay M. Lapine
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Title: Sr. Vice President and
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General Counsel and Secretary
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McKESSON CORPORATION
By: /s/ Ivan D. Meyerson
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Name: Ivan D. Meyerson
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Title: Vice President
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McKESSON MERGER SUB, INC.
By: /s/ Nancy A. Miller
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Name: Nancy A. Miller
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Title: Vice President & Secretary
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2
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EXHIBIT 3.2
AMENDMENTS TO BY-LAWS OF McKESSON HBOC, INC.
Article IV, Section 2 of the By-laws of McKesson HBOC, Inc. was amended by
adding the following sentence at the end of such Section:
"Notwithstanding anything in these By-laws to the contrary, for a period of
one year following January 12, 1999, the requisite vote or approval of the
Board of Directors necessary to terminate or replace, or fill a vacancy in
respect of, Charles W. McCall as Chairman of the Board or Mark A. Pulido as
President and Chief Executive Officer shall be no less than seventy-five
percent (75%) of the members of the Board of Directors."
The second sentence of Article III, Section 2 of the By-laws of McKesson HBOC,
Inc. was amended to provide as follows:
"Until these By-laws are further amended, the number of Directors of this
Corporation shall be ten (10)."
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EXHIBIT 99.1
Contacts: McKesson
Media
Larry Kurtz
Vice President, Corporate Communications
415-983-8418
or
Investors
Janet Bley
Vice President, Investor Relations
415-983-9357
McKESSON AND HBOC OBTAIN STOCKHOLDER APPROVALS
AND COMPLETE MERGER
SAN FRANCISCO, January 12, 1999 -- McKesson Corporation (NYSE:MCK) and HBO &
Company (NASDAQ:HBOC) announced that, at separate meetings today, their
respective stockholders each voted to approve the merger of a wholly owned
subsidiary of McKesson with and into HBO & Company and other related matters.
HBOC stockholders approved the pending merger by a favorable vote of
approximately 96 percent of the shares voted. McKesson stockholders also
approved the pending merger by a favorable vote of approximately 95 percent of
the shares voted.
The two companies completed their merger today and will begin operations
as Mckesson HBOC, Inc., tomorrow. Common shares of McKesson HBOC, Inc., will
continue to trade on the New York Stock Exchange under the symbol "MCK."
McKesson HBOC, Inc., a Fortune 100 Corporation, is the world's largest
healthcare services company. McKessonHBOC provides pharmaceutical supply
management and information technologies across the entire continuum of
healthcare, including market-leading businesses in pharmaceutical and medical-
surgical distribution, information technology for healthcare providers,
services for payors and outsourcing.
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EXHIBIT 99.2
Contacts: Media
Larry Kurtz
Vice President, Corporate Communications
415-983-8418
Or
Investors
Janet Bley
Vice President, Investor Relations
415-983-9357
McKESSON HBOC, INC. BEGINS OPERATIONS AS THE
WORLD'S LARGEST HEALTHCARE SERVICES COMPANY
SAN FRANCISCO, January 13, 1999 -- McKesson HBOC, Inc. (McKessonHBOC)
(NYSE:MCK), the world's largest healthcare services company, began operations
today. McKessonHBOC provides pharmaceutical supply management and information
technologies across the entire continuum of healthcare, including market-
leading businesses in pharmaceutical and medical-surgical distribution,
information technology for healthcare providers, services for payors and
outsourcing.
McKessonHBOC serves approximately 5,000 hospitals, 25,000 retail
pharmacies, 200,000 physicians, 10,000 long-term care sites, 750 home care
agencies, 600 healthcare payors, 450 pharmaceutical manufactures and 2,000
medical-surgical manufacturers. While more than 95 percent of the company's
revenues come from the U.S. healthcare market, McKessonHBOC also has customers
in 10 other countries.
"McKessonHBOC has a proven track record for providing information-based
solutions that reduce costs and improve quality for our customers across the
full continuum of healthcare," said Mark A. Pulido, president and chief
executive officer. "We are dedicated to improving healthcare performance by
delivering the right products and information to the right place at the right
time to advance the success of our customers as they restructure healthcare
delivery."
"McKesson HBOC, Inc. is the leader in fast-growing healthcare segments,
with favorable dynamics driving growth in each of our markets. McKessonHBOC
pharmaceutical sales are growing in excess of 15 percent per year and healthcare
information technology revenues are increasing at a rate of more than 25 percent
per year."
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McKessonHBOC Begins Operations
Page Two
"By coordinating our product and service offerings, we can reduce steps
in the healthcare delivery process," Pulido continued. "As a result, we
anticipate acceleration of our historically strong growth to create further
value for our shareholders. And, we will continue an aggressive acquisition
program to capitalize on supply management and healthcare technology
opportunities."
Four HBOC executives have joined McKesson's existing corporate officers
on the new McKessonHBOC Executive Operating Committee:
-- Charles W. McCall, chairman of the McKessonHBOC Board of Directors,
formerly HBO & Company (HBOC) chairman and chief executive officer.
-- Albert J. Bergonzi, group president, Healthcare Information
Technology, reporting to Pulido. Bergonzi was formerly HBOC president and chief
operating officer.
-- David A. Schenk, in the new position of senior vice president,
Affiliation Team, reporting to Pulido. Schenk will lead a dedicated team
selected from McKessonHBOC operating and functional units to identify and fully
capitalize on opportunities to accelerate revenue growth through cross-selling,
leveraging customer relationships, enhancing existing products and creating new
products. Schenk, who joined HBOC in 1982, had been senior vice president,
Enterprise Services, with responsibility for HBOC's Enterprise Services as well
as the services functions of the Charlotte Product Group and CyCare Business
Group. He also led all enterprise project management efforts.
-- E. Christine Rumsey, senior vice president, Human Resources and
Administration, also reporting to Pulido. Rumsey, who had been senior vice
president for Human Resources for HBOC, replaces William A. Armstrong, who is
retiring after 26 years with McKesson. She joined HBOC in 1981.
"The newly formed McKessonHBOC Affiliation Team has a goal to identify
two to three major projects that will deliver significant incremental pre-tax
income each year," concluded Pulido. "They have a target of pre-tax synergies in
excess of $75 million in fiscal year 2000 from a combination of cost savings and
cross-selling initiatives, and a target of $125 million in the following fiscal
year."
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McKessonHBOC Begins Operations
Page Three
In addition to McCall and Pulido, the McKessonHBOC Board of Directors
includes:
-- Alfred C. Eckert III, president, Greenwich Street Capital Partners,
Inc.,
-- Tully M. Friedman, chairman and chief executive officer, Friedman
Fleischer & Lowe, LLC,
-- Alton F. Irby III, chief executive, Hawkpoint Partners Limited,
-- Gerald E. Mayo, chairman, Midland Financial Services, Inc.,
-- James V. Napier, chairman of the board, Scientific-Atlanta, Inc.,
-- Carl E. Reichardt, chairman and chief executive officer, retired, Wells
Fargo & Company,
-- Alan Seelenfreund, chairman and chief executive officer, retired,
McKesson Corporation, and
-- Jane E. Shaw, chairman of the board and chief executive officer,
AeroGen, Inc.
The merger of McKesson and HBOC to form McKessonHBOC will be accounted for
as a pooling of interests. McKessonHBOC will have a fiscal year end of March 31.
The quarter ending March 31, 1999, will be the company's first quarter of
combined financial results and will include a charge for merger-related costs.
For the quarter ended December 31, 1998, McKessonHBOC will report separate
financial results for McKesson and HBOC respectively on January 25, 1999, at
4:30 PM EST.
McKesson HBOC, Inc., a Fortune 100 Corporation, is the world's largest
healthcare services company. McKessonHBOC provides pharmaceutical supply
management and information technologies across the entire continuum of
healthcare, including market-leading businesses in pharmaceutical and medical-
surgical distribution, information technology for healthcare providers, services
for payors and outsourcing. For the twelve months ended September 30, 1998,
McKessonHBOC would have had pro-forma combined revenues of approximately $21
billion. The company has customers in the United States and 10 other countries,
employs approximately 25,000 people and has approximately 263.5 million common
shares outstanding and approximately 290 million fully diluted shares on a pro-
forma basis for the quarter ended December 31, 1998. More information about
McKessonHBOC is available on the World Wide Web at: http://www.mckhboc.com.
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McKessonHBOC Begins Operations
Page Four
Except for the historical information contained herein, the matters
discussed in this press release may constitute forward-looking statements that
involve risks and uncertainties that could cause actual results to differ
materially from those projected. These statements may be identified by their
use of forward-looking terminology such as "believes," "expects," "may,"
"should," "intends," "plans," "estimates," "anticipates" and similar words.
Risks and uncertainties include the speed of integration of acquired
businesses, impact of continued competitive pressures, success of strategic
initiatives, implementation of new technologies, continued industry
consolidation, changes in customer mix, changes in pharmaceutical
manufacturers' pricing and distribution policy, the changing U.S. healthcare
environment and other factors discussed from time to time in reports filed by
McKesson HBOC, Inc. with the Securities and Exchange Commission. The company
assumes no obligation to update information contained in this press release.
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