51 and 49: What Option Care's $5.8 Billion Buyout Teaches Owners

On October 6, Option Care Health agreed to be acquired by Clayton, Dubilier & Rice (CD&R) and McKesson for $32.05 per share in cash, an enterprise value of about $5.8 billion and a premium of roughly 37% to the prior day's close. The unusual feature is the buyer group: CD&R will own about 51% and McKesson about 49%, with a route for McKesson to acquire CD&R's stake later. For owners weighing a sale, the structure shows how sellers can be paid in full today while the buyers work out control over time.

What was announced

Option Care Health is a provider of home and alternate-site infusion therapy, meaning medications delivered to patients outside a hospital. Under the agreement, shareholders receive $32.05 in cash per share, and the company will leave Nasdaq and become privately held. Management will stay in place, and Option Care will continue as a separate company rather than being folded into either buyer. The companies expect to close in the first half of 2027, subject to a shareholder vote and regulatory approvals.

Published coverage describes the equity commitments at about $2.87 billion and the debt commitments at about $3.15 billion, plus a $500 million revolving credit facility, which is a line of credit the company can draw on for working capital. McKesson's investment is reported at about $1.4 billion, which is consistent with a 49% share of the equity. The announcement as we have read it does not describe a go-shop, a period after signing when the company may solicit competing bids, and does not state a purchase multiple.

Why pair a sponsor with a strategic buyer

A private equity sponsor buys companies with a fund, typically intends to sell after several years, and brings capital and operating discipline. A strategic buyer is an operating company that buys for its own business reasons, such as new products, customers or capabilities. Each type has a limitation. A sponsor may not be able to justify the price without a clear exit, and a strategic buyer may face regulatory scrutiny or balance sheet limits if it buys the whole company outright.

Here, McKesson has said it wants to expand into specialty and rare disease therapies delivered in lower-cost community settings, while CD&R is expected to contribute healthcare services operating experience. Splitting the ownership lets McKesson gain exposure and a relationship with Option Care without taking 100% of the regulatory and financing burden on day one.

That is one reason mixed buyer groups appear in larger private deals, and why owners should be ready to evaluate them.

The path to full ownership

The most interesting term is the reported path for McKesson to buy CD&R's stake later, if certain conditions are met and regulators approve. This resembles a call option, a right but not an obligation to buy at a future date. The price formula, timing and conditions have not been disclosed in the materials we reviewed, so we cannot say how generous it is to either side.

For sellers, the option matters less than it might appear, because the shareholders are paid in cash at closing and have no continuing interest. It matters a great deal for a private owner who rolls over part of the proceeds into the new company. A rollover holder sits alongside the buyers and may be affected by a later transfer of control, so the terms that govern that transfer (tag-along rights, price floors, valuation methods) deserve as much negotiation as the headline price.

Certainty, financing and the break fees

Two numbers in the agreement are worth understanding. The company would owe a termination fee of about $146 million in specified circumstances, such as accepting a superior proposal. The buyers' parent entity would owe about $292 million, about twice as much, in other specified circumstances. A fee payable by the buyer is often called a reverse termination fee, and it is one measure of how seriously the buyer stands behind its commitments, particularly when financing or regulatory approval is involved.

Committed financing is the other signal. Having both equity and debt commitments in place at signing tells a seller that the buyer has lined up its funding. Sellers should ask for the same detail in smaller transactions, where the identity of the lender and the conditions attached to the loan can decide whether a signed deal actually closes.

What the price does and does not tell you

One published analysis reports that before the announcement Option Care traded at about 9.1 times forward EBITDA (earnings before interest, taxes, depreciation and amortization), compared with a five-year average of about 14.5 times, and that the deal price lifts that to roughly 12 times. That is a third-party estimate, not a figure from the parties. Still, it illustrates a useful point: a 37% premium over a depressed trading multiple can still leave the price below the company's own history.

What owners should take from it

Few readers will sell to a sponsor and a strategic at once. Many will, however, face offers with more than one party behind them, a minority co-investor, or a plan to buy remaining ownership in stages. In those cases the useful questions are who controls decisions after closing, what happens if one buyer wants out, and what the seller keeps if it rolls equity.

What to watch next

Option Care has withdrawn its financial guidance and will not hold a call with its third-quarter results, expected November 4. The proxy statement should describe the background of the sale, other parties contacted, and the board's reasoning, and it is the likeliest place to find the go-shop status, the multiple paid and the terms of McKesson's later purchase right.