Healthcare services provider McKesson Corp (MCK.N) said it would combine most of its information technology business with Change Healthcare Holdings Inc to form a new company with combined pro forma annual revenue of $3.4 billion.
Change Healthcare, a provider of software and analytics, network solutions and technology-enabled services, will contribute all of its businesses to the new company, with the exception of its pharmacy switch and prescription routing business.
Tennessee-based Change Healthcare is currently majority owned by Blackstone Group LP (BX.N).
The new company will be able to offer managed care companies financial and payment solutions technologies as well as tools for managing administrative and clinical complexities, McKesson said.
New York-based McKesson and Change Healthcare will own about 70 percent and 30 percent of the new company, respectively.
The companies will receive cash proceeds of about $1.25 billion and $1.75 billion, respectively, following the close of the transaction, expected in the first half of 2017.
Last week, Reuters reported talks between the companies, citing people familiar with the matter.
McKesson and Change Healthcare stockholders will jointly govern the new company and Neil de Crescenzo, chief executive of Change Healthcare, will become its CEO.
McKesson and Change Healthcare will take steps to launch an initial public offering in the months following the close of the transaction after which McKesson is expected to exit its investment in the new company.
McKesson also said it was exploring strategic alternatives for its enterprise information solutions (EIS) business, a division that provides information to hospitals and also includes a revenue management system.