Flash note: Scope to grow faster with sale of drug distribution
UDG plans to divest its drug distribution and travel health businesses to McKesson for €408m. At 11.5x 12-month trailing EBITDA, the sales multiple looks attractive in view of McKesson paying 10.5x EBITDA for Celesio in 2014. The deal concludes UDG’s transformation from low-growth, low-margin drug distribution to more dynamic and profitable healthcare outsourcing services. Our forecasts and valuation are under review.UDG Healthcare is a provider of services to the healthcare industry. Co.'s operations are divided into the following operating segments: Ashfield Commercial & Medical Services, which is engaged in providing sales and marketing services (CSO), healthcare communications, event management, and medical affairs and regulatory services to healthcare companies; Sharp Packaging Services, which is engaged in providing outsourced commercial and clinical trial packaging services to healthcare companies; and Supply Chain Services, which combines all of Co.'s healthcare logistics based companies. Co. operates in Republic of Ireland, the U.K., North America and Continental Europe.
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