Shares at Dublin-based UDG Healthcare soared as it agreed to sell two units of its business to the parent company of Lloyds Pharmacy for €407.5m in a bid to reshape its structure.
The move, which will see its supply chain services business and an arm of its commercial and medical services division transfer to US company McKeeson, will help refocus UDG’s business on the higher growth international healthcare services business.
The healthcare services provider’s share price climbed more than 7.5% on the back of the announcement.
The proceeds of the sale will be used for a variety of purposes including facilitating greater investment in the higher growth areas it has identified.
The company indicated that it is considering acquisitions to complement the organic growth increased investment will bring.
A portion of the proceeds will also be used to repay part of the group’s outstanding debt.
Disposing of the assets was seen as the right move due to the fact that opportunities for growth in its original core business of pharmaceutical wholesaling and pre-wholesaling were limited given its market leading position in Ireland and the dominance of larger rivals outside of these shores.
The original business was no longer the biggest contributor to its profits, the company said, and its diversification into the services business had accelerated in recent years.
The disposal, which is expected to be completed by the end of March next year, is subject to shareholder approval at an EGM on October 13 and regulatory approval.
UDG also announced yesterday that its chief executive Liam FitzGerald will step down next March after 23 years with the company with current chief operating officer Brendan McAtamney replacing him.
The company has been aware of Mr FitzGerald’s plans for early retirement for the past number of years and have been planning accordingly for his succession, it said.
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