Option Care Health Inc. (NASDAQ:OPCH) agreed Tuesday to be taken private by Clayton Dubilier & Rice and McKesson Corp. (NYSE:MCK) for $32.05 a share in cash. The deal gives the home-infusion provider a total enterprise value of about $5.8 billion.
The stock isn’t trading at that price yet. Shares were at $31.05, so the market is leaving $1.00 a share on the table.
- OPCH stock is climbing. See the real-time price action here.
The Deal Structure
The offer is roughly 37% above Option Care’s Oct. 5 close of $23.37. When the deal closes, CD&R will hold about 51% of the company. McKesson will put in about $1.4 billion for the remaining 49%.
The agreement also sets up a path for McKesson to buy out CD&R’s stake later, subject to conditions and regulatory approvals. BofA Securities, Barclays, Goldman Sachs, Jefferies and Wells Fargo are providing committed financing.
“This investment represents an important opportunity that aligns with McKesson’s long-term strategy to expand access and affordability to innovative therapies across the care continuum,” said McKesson CEO Brian Tyler.
Reading the Spread
The $1 gap works out to a gross return of 3.2%. The companies expect to close the deal in the first half of 2027. If it closes at the end of that window, the annualized return is about 4.4%. That’s thin, and it shows arbitrage traders expect a long timeline.
Several approvals stand in the way. The deal needs a shareholder vote, Hart-Scott-Rodino antitrust clearance and certain state healthcare approvals.
There’s also a no-shop clause, which bars Option Care from seeking rival bids. Option Care would owe about $146 million if it walked away for a better offer. The buyers would owe about $292 million if they failed to close.
Volume shows how quickly arbitrage funds moved in. About 47.3 million shares had traded, roughly 22 times the stock’s daily average, per Benzinga Pro data.
See More: Top Momentum Stocks
Longer-Term Context
The buyout price is still about 13% below the January peak of $36.80. The stock fell 29% in a single week, from $28.40 on April 24 to $20.03 on May 1. It traded in the low $20s for the rest of the summer.
Option Care Chairman Harry Kraemer said the board “unanimously concluded this transaction maximizes value for our stockholders.” Shareholders who bought near the January high may disagree.
OPCH Stock Price Activity: Option Care Health stock was up 32.78% at $31.03 at the time of publication Tuesday, according to data from Benzinga Pro.
Photo: Shutterstock
Login to comment