The Walgreens Boots Alliance will sell its wholesale pharmaceutical business to AmerisourceBergen in a $ 6.5 billion cash and stock deal.
Pharmaceutical wholesalers essentially act as intermediaries, buying medicines from manufacturers and then distributing them to customers such as drugstore chains, hospitals and doctors’ offices.
Walgreens said on Wednesday that the deal will allow it to focus more on expanding its core pharmaceutical retail business that, like others, has been shaken by the COVID-19 pandemic.
Drugstore chains and other retailers were hit hard, especially last spring, when the pandemic forced consumers to stay home and away from their stores.
Walgreens estimated in October that the pandemic reduced its operating revenue by about $ 520 million in the last quarter of fiscal 2020. But the drugstore chain also increased sales and prescriptions in the United States and saw some improvement through its Boots stores in the UK.
The Walgreens Boots Alliance Inc., based in Deerfield, Illinois, manages more than 21,000 stores, primarily in the United States and the United Kingdom. Drugstores are the primary focus of their business, unlike rival rival CVS Health Corp., which also operates large insurance and pharmacy benefit management businesses.
AmerisourceBergen will pay nearly $ 6.3 billion in cash and 2 million common shares to Walgreens’ Alliance Healthcare businesses in a deal the companies hope to close in September. Walgreens already has a nearly 30% stake in AmerisourceBergen.
Alliance Healthcare supplies more than 115,000 pharmacies, doctors and health centers in Europe and Egypt.
The companies also announced on Wednesday that they will extend their distribution contract with the United States for three years, until 2029.
Walgreens said in November that it was combining its wholesale business in Germany with McKesson Corp. and that it would control 70% of that company. A spokesman for Walgreens said on Wednesday that the joint venture with McKesson was not part of the deal with Amerisource.
The stock of AmerisourceBergen Corp., based in Chesterbrook, Pennsylvania, jumped more than 8% to $ 105.78 on Wednesday afternoon. Walgreens shares were up more than 4% to $ 43.10. Both eclipsed the increase of more than 1% in the Dow Jones industrial average, of which Walgreens is a component.
Walgreens will present results for its first fiscal quarter on Thursday.