Deal

Unprecedented ABL deal funds acquisition of Lloyds Pharmacy owner

Asset Based Lending syndicate backs landmark deal

We supported pan-European asset management group AURELIUS on its acquisition of the healthcare group McKesson UK, the parent company of LloydsPharmacy group, in a landmark deal that has now completed.

Our Debt Advisory team, led by Partners Andrew Dimmock and Dave Edwards, worked to fund the acquisition by securing a £357.5 million Asset Based Lending (ABL) facility – one of the largest seen in the UK in recent years. The funding was provided by a syndicate of six lenders, led by Barclays.

The deal, which was first announced last year, represents AURELIUS’ biggest acquisition since it was founded in 2006, with McKesson UK being carved out from its US parent McKesson Corporation.

McKesson UK is a £5.7 billion turnover business that includes the LloydsPharmacy chain and wholesale pharmaceuticals distributor AAH Pharmaceuticals. It has more than 18,000 staff across four divisions: retail, digital, homecare and wholesale.

The deal marks a major milestone for AURELIUS which has a proven track record of successful carve-out transactions and operational transformation in the European mid-market, helping companies deliver on their growth potential.

McKesson UK stands to benefit from new opportunities as a standalone business, underpinned by its strong LloydsPharmacy brand, its loyal customer base and its leading commercial footprint across wholesale pharmaceuticals. Over recent years, the company has benefited from the introduction of additional services delivered across its more than 1,300 pharmacies, a growing digital offering and the ability to support the increasing trend of primary care being delivered to patients in their home.

Dave Edwards, Partner in our Debt Advisory team, said: “This is one of the largest ABL syndications seen in the UK in the last five years and it represents a very strong statement of intent from ABL lenders that they are prepared to take on transactions of this size and complexity. We worked to optimise the terms of the £357.5 million syndicated debt facility, which is secured against the receivables and inventory from McKesson UK’s two main trading companies; LloydsPharmacy and AAH Pharmaceuticals, which is a key supplier to the NHS and the retail pharmacy sector.

“This is the biggest deal that we have supported as a firm to date and, globally, there are only a handful of deals of this scale every year. It’s a watershed deal that reinforces our position as the pre-eminent ABL advisor in the UK.”

AURELIUS’ CFO, Richard Schulze-Muth, added: “For AURELIUS, the UK’s carve-out and asset-based lending landscape is one of the most important in Europe. We are delighted to partner with FRP and have structured tailor-made financing to support the company’s transition after the carve-out. AURELIUS worked with FRP and the syndicate lenders on a financing solution adapted to current market conditions, allowing the company to focus on implementing its business plan.”

Tristan Nagler, Partner at AURELIUS, said: “With our most recent acquisition of the McKesson’s UK operations, we have proven that our investment strategy enables us to take advantage of substantial carve-out opportunities in the market. We focus on identifying business opportunities that offer possibilities for growth transformation – just as in this landmark deal. With McKesson UK now being part of the AURELIUS family, our functional experts will support the further development of a business that is already strong in its four segments. AURELIUS will work on leveraging these potentials.”

AURELIUS was also advised by Rothschild & Co. (Corporate Finance), PwC (Financial), Interpath (Tax), Mayer Brown and DLA (Legal), Cardano (Pensions), Kearney (IT), Hilco (Asset Valuations) and Mansfield (Commercial).

Related team

Andrew Dimmock

Andrew Dimmock

  • Partner
  • Debt Advisory
  • London

Dave Edwards

Dave Edwards

  • Partner
  • Debt Advisory
  • London

Nick Grainger

Nick Grainger

  • Partner
  • Debt Advisory
  • London