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In Drug Distribution, the Big Get Bigger, as Cardinal, Bergen Merge

Cardinal's acquisition of Bergen was unexpected, if only because the company has spent the last several years buying higher margin businesses that integrate vertically with its core distribution business. But the ability to get critical mass was too much to pass up; now the only question is, will the merger pass FTC muster?

The deal comes as something of a surprise, if only because Cardinal Health Inc. has spent the last several years making a series of aggressive acquisitions in higher-margin service businesses, such as Pyxis Corp. , Medicine Shoppe Ltd., and Owen Healthcare Inc. [See Deal]. Horizontal acquisitions were explicitly not part of the formula, largely because they violate the one criteria for Cardinal: deals have to be margin-enhancing.

But Bergen Brunswig Corp. was just too good an opportunity to pass up. Officials from both companies expect savings...

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