AmerisourceBergen Corp. is buying Walgreens’ health unit, Alliance Healthcare, for roughly $6.5 billion in cash and stock, Bloomberg reports.
Why It Matters: Alliance Healthcare is one of the biggest drug distributors in Europe, a shrewd grab for AmerisourceBergen, which plans to rev up its overseas operations. Meanwhile, the deal allows Walgreens to recenter its focus onto its core pharmacy unit. The debt-laden pharmacy chain has watched sales drastically decline due to Covid-19.
- The deal includes $6.275 billion in cash and 2 million shares of Amerisource common stock, making Walgreens AmerisourceBergen’s most significant stakeholder at 30%.
- It will not “include operations in China, Italy and Germany and Alliance Healthcare UK will remain a partner of Walgreens’ country unit until 2031.”
- Walgreens will also extend its agreement to source branded and generic drugs from AmerisourceBergen in the U.S. by three years until 2029.
Reuters reported in May of last year that a potential deal could be in the works, while Walgreens explored going private in 2019.
- Coincidentally, this deal marked the second sizeable health-care acquisition in the span of a few hours, with UnitedHealth Group agreeing to purchase Change Healthcare for around $8 billion.
The Outlook: The deal is expected to close in September, which is the end of AmerisourceBergen’s 2021 fiscal year. AmerisourceBergen and Walgreens gained 3.8% and 2.4%, respectively, in early U.S. trading on the news.