McKesson Corp. Denies FoxMeyer Charges
SAN FRANCISCO, CA --Jan. 13, 1997--McKesson Corp. (NYSE:MCK) today stated that the
allegations in a lawsuit filed by FoxMeyer Health Corp. on Friday, January 10, are totally
without merit, and the company intends to vigorously defend the case. FoxMeyer accused
McKesson and a dozen pharmaceutical manufacturers of conspiring to financially ruin its drug
wholesaling business.
"It is preposterous to suggest that McKesson was involved in FoxMeyer's business failure," said
a McKesson spokeswoman. "FoxMeyer had well-documented technology and warehousing
problems that led to massive operating losses and ultimately created a liquidity crisis. A failed
buyout attempt by another party preceded FoxMeyer's filing for bankruptcy."
"In fact," she added, "McKesson's purchase of FoxMeyer's assets spared its customers from
further service disruptions and saved the jobs of many employees."
Through its U.S. Health Care business, its Canadian subsidiary, Medis Health and
Pharmaceutical Services, and its minority interest in Mexico's Nadro, S.A., San Francisco-based
McKesson Corp. is the largest distributor of pharmaceuticals and health care products in North
America. -0-
Note to Editors: McKesson news releases are available at no charge through McKesson's
NewsOnDemand fax service. To immediately receive an index of available releases, call
1-800-344-6495 and press 2. On the Internet, visit McKesson on the World Wide Web at:
http://www.McKesson.com
CONTACT: McKesson Corp. Janet Bley, 415/983-9357
FoxMeyer Sues McKesson, Pharmaceutical Companies For Acting to Drive it From Drug
Distribution Business
DALLAS, TX - Jan. 13, 1997 - FoxMeyer Health Corporation (NYSE: FOX) today announced it
had filed suit in a Texas District Court alleging that McKesson Corporation and a number or
major pharmaceutical manufacturers conspired to drive its subsidiary, FoxMeyer Drug Company,
out of business.
According to the complaint, McKesson (NYSE: MCK), the largest U.S. distributor of
pharmaceutical and health care products, engaged in protracted negotiations with FoxMeyer,
purportedly seeking to acquire its drug distribution operations.
Other defendants include pharmaceutical manufacturers Pfizer, Inc., Bristol-Meyers Squibb
Company, Glaxo Wellcome, PLC, Eli Lilly and Company, Wyeth-Ayerst Laboratories, Inc.,
Hoechst Marion Rousell, Inc., Schering-Plough Corporation, Amgen, Inc., SmithKline Beecham
Pharmaceuticals Co., Zeneca, Inc., Janssen Pharmaceutica, Inc., and Pharmacia & Upjohn, Inc.,
all of whom were suppliers to FoxMeyer Drug Company.
The complaint alleges that McKesson misused confidential financial and competitive information
to which it had gained access in conceiving, perpetrating, and promoting a plan to drive
FoxMeyer out of its industry. FoxMeyer Health alleges that McKesson exploited this information
by interfering with FoxMeyer Drug's customer and vendor relationships and disrupting its
operations in order to ultimately effectuate a purchase of its competitor at a significantly
distressed price.
Shortly after McKesson gained insider knowledge of FoxMeyer's operations, the suit alleges,
trade creditors, including the defendant manufacturers, began tightening or outright denying credit
to FoxMeyer. This was despite FoxMeyer's long-standing relationships with the manufacturers,
its record of timely payments and its strong financial condition. Moreover, the manufacturers
refused to work with an investment group that had agreed to buy the drug distribution operations,
forcing FoxMeyer Drug Company to seek protection under Chapter XI of the Bankruptcy Code.
The suit alleges that the manufacturers' actions were the result of a unlawful civil conspiracy. the
plaintiff seeks to recover compensatory damages totaling in excess of $400 million, as well as
punitive damages which could amount to $1 billion or more.
"Many have questioned how a $5.5 billion company, with a newly secured $750 million credit
facility and an impeccable credit record, could suddenly be forced into bankruptcy," said
William Brewer, attorney for FoxMeyer. "FoxMeyer Health believes that the answer lies in a
conspiracy of events, many of which were orchestrated by Defendants and all of which were
taken advantage of by those whose interests were aligned with a status quo rife with inefficiency,
insider deals and incredible markups." SOURCE FoxMeyer Health Corporation
/CONTACT: Dwight P. Smith of Halcyon Associates, 214-754-6000/
Prism Entertainment Corporation Merges With Lee Video City, Inc.; Prism Emerges From
Chapter 11; Name Changed To Video City, Inc.
LOS ANGELES, CA - Jan. 13, 1997 - The merger of Lee Video City, Inc. into Prism
Entertainment Corporation was completed on January 8, 1997. Lee Video City owns and operates
18 superstores that rent and sell videocassettes, and manages five additional stores, all in
California under the Video City name. Video City operates superstores in secondary markets.
Prism is a publicly held corporation which has produced films for distribution primarily through
pay and other cable channels and network television and syndication. Prism also distributed
videocassettes of its films to the home video market.
Prism filed a voluntary Chapter 11 petition under the U.S. Bankruptcy Code on December 1, 1995
and has been engaged in only limited business activities for more than a year, consisting of the
exploitation of its existing film products. Prism's plan of reorganization was approved last month
by the Court, and Prism has now emerged from Chapter 11. The combined company intends to
concentrate on the operation and expansion of video retail stores and the exploitation of the
existing film library.
As a result of the merger, the Company's headquarters has been moved to 6851 McDivitt Drive,
Bakersfield, California, and the Company's name has been changed to Video City, Inc. The new
chairman of the board and chief executive officer is Robert Y. Lee, who was previously chief
executive officer of Lee Video City, Inc. Barry Collier continues as President.
SOURCE Prism Entertainment Corporation /CONTACT: Robbie Lee or Barry Collier of Prism
Entertainment Corporation, 805-397-7955/