Walgreens Boots Alliance has agreed to sell most of its pharmacy distribution unit to drug wholesaler AmerisourceBergen for $6.5 billion to focus on its core retail business and expanding its health-care offerings.
The Alliance Healthcare unit distributes health-care products and services to more than 115,000 pharmacies, hospitals, and other health providers, operating in 13 countries, mostly in Europe.
The deal announced on Wednesday calls for AmerisourceBergen to pay about $6.3 billion in cash and two million of its shares for Alliance Healthcare. Under an existing agreement, Walgreens sources branded and generic drugs from AmerisourceBergen in the U.S.
The transaction “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,” Walgreens CEO Stefano Pessina said in a news release. “The transaction will fuel higher future investments to grow and transform our core retail pharmacy and healthcare businesses.”
In its latest quarter, Walgreens generated $6 billion in sales from Alliance Healthcare and the 30% stake it owns in AmerisourceBergen. U.S. sales for Walgreens’s U.S. retail-pharmacy unit were up roughly 4% to $27 billion.
As The Wall Street Journal reports, Walgreens’s move to exit most of its wholesale business comes as faces challenges related to the coronavirus pandemic. It has also been “seeking to give patients more reasons to visit [its retail] locations as Amazon pushes into the prescription-drug business.”
The company has partnered with VillageMD to open clinics with primary-care doctors at Walgreens sites across the U.S. over the next five years.
For AmerisourceBergen, “The deal is designed to expand AmerisourceBergen’s presence in Europe, as Alliance is one of the largest wholesalers on the continent,” the Financial Times reported.
“Today’s announcements will expand our reach and solutions in pharmaceutical distribution and add to AmerisourceBergen’s breadth and depth of global manufacturer services,” the company’s CEO, Steven Collis, said.
In trading Wednesday, Walgreens shares rose 4.5% to $43.03. The sale of Alliance Healthcare is expected to add to its adjusted earnings per share in the high-teens percentage after it closes by the end of fiscal 2021.