FTC intensifies scrutiny of $3.5 billion Covetrus and MWI Animal Health merger amid growing regulatory pressure

The US Federal Trade Commission is probing Covetrus’s proposed $3.5 billion merger with MWI Animal Health, raising concerns over market competition and supply chain impacts in the veterinary sector.

The US Federal Trade Commission has deepened its review of Covetrus’s proposed merger with MWI Animal Health, a unit of Cencora, sharpening scrutiny of a $3.5 billion transaction that could reshape veterinary distribution and practice-management software. The agency has sought information from customers and rivals as it examines whether the combination would lessen competition or strain supply chains serving animal health providers.

The deal, first announced in February and later set out in definitive form in March, would bring together Covetrus’s technology, prescription and logistics businesses with MWI’s distribution platform. Cencora would receive cash and preferred equity while retaining a 34.3% non-controlling stake in the combined company, according to company announcements and transaction advisers.

The review comes against a broader regulatory backdrop in animal health, where the FTC has previously imposed divestiture remedies in major mergers to preserve competition. That history suggests the agency is likely to focus closely on market concentration and customer switching costs.

For investors, the timing matters. Covetrus remains loss-making, so valuation is being judged more on sales than earnings, while the company’s moderate financial score points to limited room for disappointment if the deal stalls or is conditioned more heavily than expected.