McKesson Corporation (pharmaceutical company, a major distributor of pharmaceuticals and pharmacy network operator) recently published a good report for the 2nd quarter and 6 months of the 2014 fiscal year, that started on March 31. Quarterly revenue increased 10.8% y/y, exceeding expectations by 2.7%. Net income rose 0.7% y/y and it beat expectations by 12.0%. US sales. (+9% y/y) grew faster than anywhere else. The media recently reported the purchase of a 50% stake in Celesio, the biggest European distributor of medicines. Management of McKesson plans to buy 75% of the shares Celesio. McKesson expects the transaction to be $1.00 to $1.20 accretive to earnings, and by the fourth year McKesson expects to realize annual synergies of $275 to $325 mln. Also, McKesson recently bought the company PSS World Medical (American distributor of medical products, equipment, billing services and pharmaceutical related products). We believe that the company's sales will continue to grow in the medium term, primarily due to the US market. In addition, the purchase of new assets will expand the company’s geography of deliveries, which will also contribute to sales growth. In addition, it should be noted that the Company generates a significant amount of cash. The media recently reported the BoD’s decision to pay a quarterly dividend of $0.24 per share (+20% y/y), which implies a 0.6% yield. Our medium-term fundamental valuation of McKesson (MCK) shares is $175. Short-term goal is $170.