The home infusion company jumped more than 20% in extended trading. The reported structure, with McKesson holding an option to take full control later, is the detail that sets the deal apart.
Shares of Option Care Health jumped about 22% in after-hours trading on Monday, and changed hands near $29 before Tuesday's open, following a report that drug distributor McKesson and private equity firm Clayton, Dubilier & Rice are in advanced talks to take the home infusion provider private in a deal valued at more than $5 billion including debt.
Option Care had closed the regular session at $23.37, up 3.22%, giving it a market value of about $3.5 billion. McKesson closed up 1.46%. A deal could be reached as soon as Tuesday, according to the report, though the talks could still fall apart. McKesson declined to comment.
An unusual structure
The reported terms would split ownership, with CD&R holding 51% and McKesson 49%. McKesson would gain the right to buy out CD&R's stake in the future.
That design sets the deal apart from a standard take-private. For CD&R, it builds an exit route into the transaction at the start: rather than relying on a future sale or public listing, the firm would have a natural buyer with a contractual right to acquire its stake. For McKesson, it offers a way into the fast-growing home infusion market without taking full ownership on day one.
The price
Before the report, Option Care carried an enterprise value of about $4.6 billion, including roughly $1.2 billion of debt. A deal at more than $5 billion including debt would represent a premium of about 9% or more on enterprise value. Because debt stays fixed, the premium for shareholders is larger. With about $3.4 billion of equity value implied before the report, a $5 billion enterprise value would leave about $3.8 billion for equity holders, a premium of roughly 12% to 13%.
Extended-hours prices near $29 suggest investors expect a higher price than that minimum, or are betting the final number lands well above $5 billion.
Why home infusion
Option Care administers intravenous drugs in patients' homes and in outpatient suites, a setting outside the hospital that payers have increasingly embraced. For a distributor like McKesson, which already moves specialty drugs through the system, controlling the last mile of administration could deepen relationships with drug makers and insurers.
What to watch
A signed agreement with disclosed terms would turn the report into a deal. The key details would be the per-share price, whether the 51 to 49 split holds, and the terms of McKesson's option. Antitrust review is another factor, since the combination would link a major drug distributor with a large infusion provider. Until a filing appears, the extended-hours gain is a wager on an announcement that has not yet happened.