What is the significance of the DOJ's Second Request?

A Second Request from the DOJ, issued under the Hart-Scott-Rodino Antitrust Improvements Act, indicates that the DOJ is conducting a more thorough review of the proposed transaction than a standard initial review. It means they require additional information and documentary materials to assess potential antitrust concerns.

Will the DOJ's Second Request delay the formation of the new healthcare IT company?

While a Second Request generally extends the review period, McKesson and Change Healthcare have stated they expect the transaction to still be completed in the first half of calendar year 2017. However, the exact timeline will depend on the DOJ's review process and the cooperation of both companies.

What conditions must be met for the transaction to close?

Key closing conditions include obtaining antitrust clearance from the DOJ and the completion of audited financial statements for the McKesson Technology Solutions businesses being contributed to the new company. Other customary closing conditions may also apply.

What are the potential risks associated with this transaction?

The filing mentions several risks, including the possibility that the transaction may not be completed, that expected benefits may not materialize, difficulties in integrating the new company, and risks related to the performance and market growth of the contributing businesses and the new entity. Antitrust clearance is a significant factor.

MCK 8-K SEC Disclosure

Summary

McKesson Corporation (MCK) announced in an 8-K filing on September 5, 2016, that it received a Second Request for information from the U.S. Department of Justice (DOJ) regarding the formation of a new healthcare information technology company. This formation is a result of a contribution and sale agreement with Change Healthcare, Inc. entered into on June 28, 2016. The Second Request is a standard part of the antitrust review process under the Hart-Scott-Rodino Act and indicates that the DOJ is conducting a more in-depth investigation into the transaction. Despite this development, McKesson and Change Healthcare stated their intention to cooperate fully with the DOJ and continue to expect the transaction to be completed in the first half of calendar year 2017. Investors should monitor the progress of this antitrust review, as any significant delays or conditions imposed by the DOJ could impact the transaction's completion and its expected benefits.

Key Highlights

1McKesson received a Second Request for information from the U.S. Department of Justice (DOJ) concerning the formation of a new healthcare IT company with Change Healthcare.
2The Second Request, issued under the Hart-Scott-Rodino Antitrust Improvements Act, signifies an in-depth review of the transaction by the DOJ.
3McKesson and Change Healthcare are committed to cooperating with the DOJ's review process.
4The companies continue to anticipate the transaction's completion in the first half of calendar year 2017.
5The transaction involves a contribution and sale agreement dated June 28, 2016, to create a joint healthcare information technology entity.
6Potential risks and uncertainties related to the transaction's completion and expected benefits are noted, including antitrust clearance.

MCKESSON CORP 8-K Report, Corporate Update (Sep 6, 2016)

Summary

Key Highlights

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