8-KOther Events

MCKESSON CORP 8-K Report, Corporate Update (Dec 21, 2005)

Filed December 21, 2005For Securities:MCK

Summary

McKesson Corporation has filed an 8-K report detailing a significant development regarding a derivative lawsuit. On December 16, 2005, the company and certain current and former directors and officers filed a stipulation of settlement in the Delaware Court of Chancery to resolve a derivative action. Under the proposed settlement, which requires court approval, McKesson's insurance providers will pay $30 million to the company. This payment is in exchange for a release of the company's potential claims against eighteen current or former directors and officers of McKesson and HBO & Company. Additionally, plaintiff's attorneys' fees, capped at $6 million, will be paid from this settlement amount. The defendants maintain their denial of any wrongdoing but have agreed to the settlement to avoid ongoing litigation costs and complexities. This settlement also encompasses claims from two other derivative actions pending in California.

Key Highlights

  • 1McKesson Corporation and associated directors/officers have reached a settlement in a derivative lawsuit filed in Delaware.
  • 2The settlement involves a payment of $30 million from the company's insurance carriers.
  • 3This payment is in exchange for releasing potential claims against 18 current or former directors and officers of McKesson and HBO & Company.
  • 4Plaintiff's legal fees, up to $6 million, will be covered by the settlement amount.
  • 5The settlement aims to resolve three derivative actions, including one in Delaware and two in California.
  • 6Defendants deny all allegations of wrongdoing but agreed to the settlement to avoid litigation burdens.
  • 7The Delaware court has scheduled a hearing for February 21, 2006, to consider approval of the settlement.

Frequently Asked Questions

This 8-K filing announces a significant development regarding a derivative lawsuit against McKesson Corporation and its current/former directors and officers. It details a proposed settlement that has been filed with the Delaware Court of Chancery.

The settlement involves $30 million in settlement consideration paid by McKesson's insurance companies to the company. The company itself is not directly paying this amount out of its operating funds, and plaintiff's attorneys' fees of up to $6 million will also be paid from this settlement consideration. McKesson avoids the costs and risks associated with continued litigation.

The lawsuit involves derivative claims brought on behalf of McKesson Corporation. The settlement is between McKesson, certain present and former directors and officers of McKesson, and former directors and officers of HBO & Company. The settlement also resolves claims in related actions in California.

The proposed settlement is subject to court approval. The Delaware Court of Chancery has set a hearing for February 21, 2006, to consider its approval. A notice to shareholders describing the settlement terms will be sent prior to this hearing.