Walgreens grappled with lower customer traffic last year due to the coronavirus pandemic.
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Walgreens Boots Alliance Inc. WBA 2.48% said it agreed to sell the majority of its pharmacy wholesale unit to AmerisourceBergen Corp. ABC 7.53% , a move it said would help the drugstore chain to better focus on its retail pharmacy business and health offerings.
AmerisourceBergen, a distributor of pharmaceutical products, will pay $6.5 billion for the wholesale business, Alliance Healthcare, including about $6.3 billion in cash and two million of its shares, the companies said Wednesday. The planned deal would expand Walgreens’ nearly 30% stake in AmerisourceBergen, which makes it the largest shareholder of the latter company, according to both firms.
In its latest quarter, Walgreens generated $6 billion in sales from its wholesale unit, which consists of Alliance Healthcare and the stake in AmerisourceBergen. The Alliance unit distributed health-care products and services to more than 115,000 pharmacies, hospitals and other health providers annually, as of the end of last August, Walgreens said in a filing. It operated then in 11 countries, most of them in Europe, the filing says.
Walgreens grappled with challenges related to the coronavirus last year, in part because the pandemic damped customer traffic and prescription demand in the U.K., where the company operates the Boots U.K. chain. The British government ordered a new lockdown this week.
However, sales for its latest quarter for its retail-pharmacy unit in the U.S. were up roughly 4% to $27 billion. The deal to sell off its wholesale business will allow it to home in on its retail pharmacies, Walgreens said. It also said the transaction would help it focus on its health-care businesses. The retailer said last year it was working with primary-care provider VillageMD to open 500 to 700 clinics at Walgreens sites across the country over the next five years.
AmerisourceBergen said the deal would bolster its business providing goods to pharmacies and pharmacists.
Walgreens is scheduled to release results for its first quarter for its 2021 fiscal year Thursday.
Walgreens and AmerisourceBergen also said Wednesday they extended a distribution agreement for the U.S. by three years until 2029. The Alliance Healthcare U.K. branch will continue to distribute products to Walgreens’s Boots business until 2031, the companies said.
Write to Micah Maidenberg at [email protected]
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