Why PSS World Medical Shares Skyrocketed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of medical products distributor PSS World Medical (Nasdaq: PSSI  ) soared a whopping 32% today after drug wholesale giant McKesson (NYSE: MCK  ) offered to acquire it for $1.46 billion.

So what: The all-cash deal values PSS at $29 per share and represents a 34% premium to its closing price on Wednesday. McKesson is making the move to boost margins at its surgical devices supply segment, and judging from its own stock's 5% jump today, Wall Street seems pleased with the price being paid to do it.

Now what: By the fourth year after the close of the deal, McKesson expects to realize annual pre-tax synergies of more than $100 million. "The unified organization will bring extensive distribution capabilities, deep product and technology expertise and a broad portfolio of business services to an expanding industry, helping our customers improve efficiency and productivity, and deliver better care," McKesson Chairman and CEO John Hammergren said. So while PSS shares are likely all popped out, McKesson's newly bolstered scale might be a driver of market-topping gains going forward.

Interested in more info on PSS? Add it to your watchlist.

Interested in more info on McKesson? Add it to your watchlist.

Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend McKesson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2076451, ~/Articles/ArticleHandler.aspx, 12/19/2014 10:46:11 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 30 minutes ago Sponsored by:
DOW 17,804.80 26.65 0.15%
S&P 500 2,070.65 9.42 0.46%
NASD 4,765.38 16.98 0.36%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/19/2014 4:07 PM
MCK $211.12 Down -0.85 -0.40%
McKesson CAPS Rating: *****
PSSI.DL $0.00 Down +0.00 +0.00%
PSS World Medical,… CAPS Rating: No stars

Advertisement