Walgreens Boots Will Sell Majority Stake in its Healthcare Distribution Business

Walgreens Boots announced on Wednesday that the company will sell a majority stake in its healthcare distribution business to AmerisourceBergen Corp for $6.5 billion.

According to the company, the majority-cash deal will allow it to focus on its core retail pharmacy business while strengthening and expanding its partnership with AmerisourceBergen.

In the deal, Walgreens will receive $6.275 billion in cash and 2 million shares in AmerisourceBergen common stock for the sale of its Alliance Healthcare business.

“This strategic agreement with AmerisourceBergen, which we consider to be the world’s leading pharmaceutical wholesaler, is a very positive development for the two companies,” said Walgreens CEO Stefano Pessina.

He added, “This deal will enable significant value creation for both companies and will generate new synergies in addition to those already captured. It is a logical step following the success of our long-term strategic relationship with AmerisourceBergen which has been a strong and trusted partner since 2013.”

“The transaction will fuel higher future investments to grow and transform our core retail pharmacy and healthcare businesses, and is EPS accretive long-term for Walgreens Boots Alliance,” he continued.

“AmerisourceBergen’s vital role in the health system as a key pillar of pharmaceutical innovation and access has been on full display over the past year,” said Steven Collis, Chairman, President & Chief Executive Officer of AmerisourceBergen.

“AmerisourceBergen’s financial and strategic position enable this next evolution of enhancing our ability to provide healthcare capabilities across regions and deliver innovative solutions for our upstream and downstream partners. Today’s announcements will expand our reach and solutions in pharmaceutical distribution and add to AmerisourceBergen’s breadth and depth of global manufacturer services, supporting our ability to create differentiated value for all our stakeholders. I look forward to extending and expanding our successful partnership with Walgreens Boots Alliance and welcoming the industry-leading team at Alliance Healthcare to AmerisourceBergen. Together, we will fulfill AmerisourceBergen’s purpose of being united in our responsibility to create healthier futures.”

According to the press release, the two companies have also agreed to strengthen their strategic partnership by extending and expanding their commercial agreements.

Their U.S. distribution agreement will be extended by three years until 2029 and their partnership is being expanded to include a commitment to pursue additional opportunities in sourcing and distribution. Furthermore, Alliance Healthcare UK will remain the distribution partner of Boots until 2031. Together, these agreements are expected to create incremental growth, synergies and efficiencies.

Walgreens Boots Alliance shares saw gains of nearly 3% while AmerisourceBerge saw a jump of almost 8% on the news.

It was this past October that Walgreens said its business will “continue to be negatively impacted when compared with pre-COVID-19 levels” in the first half of the year. The company still forecasts low-single digit profit growth for 2021.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.