What is the primary purpose of this 8-K filing?

This 8-K filing announces the commencement of McKesson Corporation's exchange offer to separate its interest in Change Healthcare Inc. It details the structure of the separation, which involves a subsidiary merger and aims for a tax-free distribution to McKesson shareholders.

How will McKesson shareholders be affected by this separation?

McKesson shareholders will have the option to exchange their McKesson shares for shares in the spun-off entity, SpinCo (which will become part of Change Healthcare). If not all shares are exchanged, remaining shares will be distributed. Ultimately, participating shareholders will own approximately 51% of the combined Change Healthcare entity on a fully-diluted basis.

Are there any tax implications for McKesson shareholders?

McKesson Corporation intends for the distribution of SpinCo shares to be a tax-free transaction for U.S. federal income tax purposes. However, shareholders should consult their own tax advisors for personal tax implications.

What are the key conditions for this separation to be completed?

The separation is subject to several conditions, including the effectiveness of registration statements filed with the SEC for both SpinCo and Change, the Merger Agreement being in full force, and all conditions to the Merger being satisfied or waived. Both parties also need to receive legal opinions regarding the tax treatment of the transactions.

MCK 8-K: Material Agreements

Summary

McKesson Corporation (MCK) announced the commencement of its exchange offer to separate its interest in Change Healthcare. This separation is being executed through a merger of a wholly-owned subsidiary, PF2 SpinCo, Inc. (SpinCo), with Change Healthcare Inc. (Change). The process involves McKesson offering its common stockholders the option to exchange their McKesson shares for SpinCo shares, which represent McKesson's stake in Change Healthcare. If the exchange offer is not fully subscribed, remaining SpinCo shares will be distributed via a spin-off. Following these distributions, SpinCo will merge with Change, with Change as the surviving entity. McKesson stockholders who participate in the exchange or receive shares in the spin-off will collectively own approximately 51% of Change's common stock on a fully-diluted basis. The company intends for these transactions to be tax-free for U.S. federal income tax purposes.

Key Highlights

1McKesson is initiating an exchange offer to separate its stake in Change Healthcare.
2The separation involves a merger of McKesson's subsidiary, SpinCo, with Change Healthcare.
3Shareholders can exchange McKesson stock for SpinCo stock, or receive SpinCo stock in a potential spin-off.
4Following the merger, McKesson's former stockholders will own approximately 51% of Change Healthcare.
5The transactions are structured to be tax-free for U.S. federal income tax purposes.
6Both McKesson and Change Healthcare have entered into a Separation and Distribution Agreement outlining the terms of the separation.
7Key conditions for the transaction include SEC effectiveness of registration statements and satisfaction of merger conditions.

MCKESSON CORP 8-K Report, Material Agreement (Feb 10, 2020)

Summary

Key Highlights

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