Cencora's Animal Health Merging with Covetrus in $3.5B Deal

• Cencora will receive $1.25 billion cash at closing, $800 million in preferred equity, and $1.45 billion in common equity, while keeping a minority stake of 34.3%
• The deal is subject to regulatory approvals and is not expected to close before September 2026, the end of Cencora's fiscal year 2026
• Cencora reaffirmed its fiscal 2026 outlook, indicating the transaction will not impact its current financial projections

Summary

Deal Overview:

Drug distributor Cencora announced a $3.5 billion merger between its MWI Animal Health division and privately held Covetrus, creating a combined animal-health distribution and technology company.

Deal Structure:

• Cencora will receive $1.25 billion in cash at closing
• $800 million in preferred equity
• $1.45 billion in common equity
• Cencora retains a 34.3% non-controlling stake in the merged entity

Key Companies and Sector:

• Cencora: Major pharmaceutical and drug distributor divesting its animal health unit
• Covetrus: Privately held animal health company
• Sector: Animal health distribution and technology

Timeline and Conditions:

• Deal subject to regulatory approvals and customary closing conditions
• Expected closing: Not before September 2026 (end of Cencora's fiscal year 2026)
• Announcement date: February 18, 2026

Market Implications:

Cencora reaffirmed its fiscal 2026 outlook, indicating confidence that the transaction will not negatively impact near-term financial performance. The deal represents a strategic divestiture for Cencora, allowing the company to monetize its animal health assets while maintaining significant minority ownership in the combined business. The transaction consolidates the animal health distribution market, potentially creating a more competitive player against established veterinary supply chains. For investors, the $1.25 billion cash component provides immediate value return, while the retained equity stake offers continued exposure to the growing animal health sector.