Two mergers between the nation's top four drug wholesalers were scrapped Friday, a week after a federal judge blocked the deals because of antitrust concerns.
McKesson Corp., the nation's No. 1 drug wholesaler, had planned to buy No. 4 AmeriSource Health Corp. for $1.75 billion. The second-largest wholesaler, Cardinal Health Inc., was to acquire No. 3 Bergen Brunswig Corp. for $2.6 billion.
The companies cited a temporary injunction to halt the mergers granted last week by U.S. District Court Judge Stanley Sporkin in Washington. The Federal Trade Commission sought the injunctions, arguing that the deals would reduce competition in the drug wholesale business and drive up prices.
AmeriSource had said following Sporkin's ruling that its merger would likely fall through.
The FTC said if the mergers were allowed to proceed, the two new companies would end up with 80 percent of the $80 wholesale billion drug industry and could drive up prices 1 percent, or $800 million.
Donald Roden, president and chief executive of Orange, Calif.-based Bergen Brunswig, said Friday his company felt the merger would have reduced costs and benefited consumers. But fighting the injunction would have been too expensive and uncertain, he said.
In his ruling, Sporkin said the FTC would likely win a permanent injunction.
As competition in the drug-distribution business has become more intense, the companies sought the deals as a way to lower costs and boost profits.
McKesson, based in San Francisco, acquired the wholesaler FoxMeyer Drugnow before announcing its plan to acquire Malvern, Pa.-based AmeriSource in September 1997. Bergen Brunswig had agreed a month earlier to acquire Dublin, Ohio-based Cardinal Health.
In morning trading, AmeriSource shares rose 56 1/4 cents to $51.25, while McKesson shares were unchanged, both on the New York Stock Exchange. Bergen Brunswig shares slipped 68 3/4 cents to $42.06 1/2 and Cardinal Health shares were down 68 3/4 cents at $92.12 1/2, also on the NYSE.