McKesson bid for Celesio fails due to lack of investor support McKesson admitted defeat in its $8.6bn bid for Celesio, the German-based medicines distribution group, after a battle with Elliott Associates , the activist hedge fund, over the deal. The US drugs wholesaler said it had failed to reach the 75 per cent acceptance threshold among Celesio shareholders required for the acquisition to go ahead. McKesson raised its bid last Thursday after an initial offer was rejected by Elliott, which had built a 25 per cent stake in the German group. The US hedge fund, known for a succession of high-profile corporate showdowns, agreed to sell part of its stake at the increased price but its lukewarm support was not enough to carry the deal over the finish line. Failure of the acquisition represents a blow to McKesson, which planned to use it as a bridgehead for European expansion, and to Haniel, the German family-owned investment company which had agreed to sell its 50 per cent stake in Celesio. "McKesson would have been a very good partner," said Stephan Gemkow, Haniel chairman and head of Celesio's supervisory board. Thus, it is a pity that the takeover bid has failed for the time being. However, Celesio said it was "strategically very well positioned" to remain competitive as an independent company. Elliott had previously called for the company to consider a break-up leading to the sale of its wholesale and pharmacy businesses to separate buyers. John Hammergren, McKesson chief executive, said he was disappointed but added: "We . . . will continue to explore and evaluate opportunities to further strengthen our businesses through our disciplined approach to capital allocation." Celesio, based in Stuttgart, has 132 wholesale branches that supply 65,000 pharmacies and hospitals in 14 countries, mostly in Europe. It also operates the Lloyds pharmacy chain and reported sales of €22.3bn in 2012. A takeover by McKesson would have created one of the world's biggest pharmaceutical suppliers and accelerated consolidation of the drugs distribution market after Alliance Boots, the UK pharmacy chain, forged alliances with Walgreens and AmerisourceBergen of the US in the past two years. Mr Gemkow said the failure was "not the end of the world" and Haniel would now "calmly analyse the situation and consider all options." Haniel had planned to use the €2bn it would have received from the deal to invest in smaller companies within Germany, leaving its 30 per cent stake in Metro, Germany's largest retailer, as its biggest holding. McKesson made a "best and final" offer of €23.50 a share on Thursday, up from an initial €23, valuing the company at €4bn, or €6.3bn including debt. Elliott responded by saying it would sell part of its stake - accounting for about 15 per cent of Celesio shares - but that still left McKesson relying on small shareholders to reach the 75 per cent acceptance threshold. McKesson joins a long line of companies scarred from confrontation with Elliott, run by US billionaire Paul Singer, whose adversaries have ranged from the Argentine government to Wm Morrison, the UK supermarket chain. Elliott on Monday declined to comment.