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Hedge fund sues McKesson for allegedly favoring big money rival

Prescription drug distributor McKesson Corp. headquarters is seen in San Francisco.

McKesson could be in trouble for allegedly favoring one big hedge fund over another.

The American health-care services and information technology company is being sued by Magnetar Capital over McKesson's January purchase of German competitor Celesio, a health and pharmaceutical company based in Stuttgart.

Magnetar, the $10 billion firm based in Evanston, Illinois, led by Alec Litowitz, claims that McKesson broke German law by paying rival hedge fund Elliott Management 30.95 euros for each Celesio convertible bond it held—while others got the equivalent of 23.50 euros, according to Magnetar.

The firm said that McKesson should have offered to pay more than 370 million euros to minority shareholders and bondholders of Celesio. Convertible bonds offer buyers the chance to "convert" them into company stock later on. The bonds typically gain in value along with the stock.