Omnicare to purchase rival NeighborCare for $1.55b

COVINGTON, Ky. -- Omnicare Inc., a provider of pharmaceuticals and services to elderly care facilities, said yesterday it has reached an agreement to buy rival NeighborCare Inc. for about $1.55 billion.

The deal, which comes two days after Omnicare sweetened its bid, would enhance Omnicare's position as a leading provider of pharmacy services for the elderly with a nationwide network of pharmacies serving long-term care providers in 47 states and the District of Columbia.

Under the transaction approved by the boards of both companies, Omnicare would pay $34.75 per share in cash for Baltimore-based NeighborCare. It will also assume about $245 million in NeighborCare debt.

Based upon results for the quarter ended March 31, Omnicare's combined annual revenue on a pro forma basis will be about $6 billion after the deal is completed.

It will bring Omnicare's total number of beds served to nearly 1.4 million, an increase of approximately 27 percent.

The merger, which has already cleared the antitrust waiting period, is expected to close during the third quarter.

Omnicare predicts the deal will add significantly to earnings per share in 2006 and beyond.

John J. Arlotta, NeighborCare's chairman, president, and chief executive, said: ''After careful consideration, our board has decided that Omnicare's revised offer is in the best interests of our shareholders. We now believe that we can create even greater value by combining with Omnicare."

On Tuesday, Omnicare raised its offer to $34.75 per share.

A week earlier, NeighborCare had urged shareholders to reject Omnicare's previously sweetened offer of $32 per share, saying the proposed price was inadequate.