Cencora to refocus on drug distribution with $3.5 billion divestiture of animal health unit

Feb 18 (Reuters) - Cencora COR.N will merge its subsidiary MWI Animal Health with privately held Covetrus in a deal valuing the unit at $3.5 billion, the companies said on Wednesday, as the drug distributor sharpens its focus on its core business.

Under the agreement, Cencora will receive $1.25 billion in cash at closing, $800 million of preferred equity and $1.45 billion in common equity in the combined company, while keeping a 34.3% non-controlling stake in the merged business.

Cencora's strategic pivot follows its plans to offload businesses that do not align with its long‑term priorities and place greater emphasis on its core drug‑distribution operations.

The company had previously said the animal unit does not closely align with the company's long-term strategy, along with legacy U.S. hub services and a pro forma equity investment in Brazil.

The combination would broaden the products and services offered to veterinarians and animal-health professionals and improve logistics, Covetrus CEO Ben Wolin said.

The companies said the deal is subject to regulatory approvals and other customary closing conditions.

Cencora reaffirmed its fiscal 2026 outlook, noting that it does not anticipate the deal closing before the end of its financial year in September 2026.