Drug distributor AmerisourceBergen recently announced plans to acquire MWI Veterinary Supply, a leading animal health distribution company in the US, for $2.5 bn. MWI distributes of more than 50,000 animal health products throughout the US and the UK. The company reported EBITDA of $132.97 mn on sales of $2.98 bn in the twelve months ended September 30, 2014. The deal, expected to close during the March quarter, will be financed using cash and long-term debt, AmerisourceBergen said. The acquisition of MWI will allow AmerisourceBergen to enter the fast-growing animal health products distribution business as pet ownership rises in the US. The $22 bn industry for animal medicines and vaccines is expected to grow 5.7% per year from 2011 to 2016, according to a report by Technology Acceleration Partners, a private capital development firm targeting animal health, food and agriculture ventures. The acquisition of MWI is expected to contribute approximately 8 cents in adjusted earnings per share to AmerisourceBergen’s fiscal year 2015, and is expected to generate approximately $50 mn in synergies by the end of the third full year, driven primarily by the benefits of AmerisourceBergen’s scale and product sourcing opportunities. I think the deal is a logical extension of AmerisourceBergen’s pharmaceutical-distribution and services businesses. With target price of $110, the company’s shares, I believe, represent nice medium-term investment opportunity. $ABC, AmerisourceBergen Corporation / 1440