Capstone to purchase PCA Deal for division of Beverly Enterprises valued at $862 million

Headquarters to leave city

Transaction will form largest institutional pharmacy firm in U.S.

April 17, 1997|By M. William Salganik | M. William Salganik,SUN STAFF

Capstone Pharmacy Services announced yesterday that it will acquire Pharmacy Corp. of America, the institutional pharmacy division of Beverly Enterprises, in a deal valued at $862 million.

The deal will bring management and board changes to Capstone, and will result in its headquarters moving from Baltimore to Dallas or the Tampa, Fla., area.

But Capstone had already planned to move its headquarters, Dirk Allison, Capstone's president and chief executive officer, said yesterday.

He said the headquarters move would mean the loss of 30 to 35 jobs at its Washington Boulevard facility. Other Capstone operations there, employing more than 100 people to fill prescriptions for prisons and nursing homes, will not be affected, Allison said. The company has been based in Baltimore since 1995, when it moved its corporate offices from New York.

The deal, if approved by regulators and shareholders, would create the largest independent institutional pharmacy company in the country. Institutional pharmacies fill prescriptions, through the mail or by delivery, for nursing homes and other facilities.

After absorbing PCA, Capstone would have 100 institutional pharmacies in 32 states generating estimated 1997 revenues of $900 million. Capstone had $144 million in revenue in 1996, operating 40 institutional pharmacies in 15 states.

Beverly, based in Fort Smith, Ark., operates 630 nursing and rehabilitation facilities, as well as outpatient therapy clinics, assisted living facilities, and hospice and home health agencies.

Capstone would issue approximately 50 million shares of its stock, valued at $587.5 million based on Tuesday's closing price, to Beverly shareholders and assume $275 million in debt. The deal would mean Beverly stockholders, who would receive 0.44 of a share of Capstone stock for each share of Beverly they hold, would own 57 percent of Capstone.

Dr. C. Arnold Renschler, president of PCA, would become president and CEO of the reshaped Capstone. Allison will become senior vice president of Counsel Corp., the Toronto firm which is Capstone's largest shareholder. A new board of directors will be composed half of members selected by the old Capstone and half of members selected by Beverly, Allison said.

Allan Silber, Counsel's chairman and CEO, will continue as chairman of Capstone.

Last June, Capstone, itself the product of several make-overs in the last few years, announced a $150 million deal to buy Symphony Pharmacy Services, the institutional pharmacy division of Integrated Health Services of Owings Mills, which roughly doubled Capstone's size.

As Capstone became more of a national operation rather than one concentrated in the Northeast, Allison said, it decided last fall to move its headquarters to Dallas, and was planning to complete the move by the end of may.

Pub Date: 4/17/97

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