Boots to Get a Boost From Latest Walgreens Boots Alliance Deal
LONDON — Boots’ pharmacies and stores across Britain are likely to get a boost from a new deal that will see its owner, Walgreens Boots Alliance, spin off the group’s wholesale pharmaceutical business.
Walgreens Boots Alliance, which is based in Deerfield, Ill., has agreed to sell the majority of its Alliance Healthcare businesses to its longstanding partner, AmerisourceBergen, for $6.5 billion.
WBA is already the largest shareholder of AmerisourceBergen with a stake of nearly 30 percent, and Ornella Barra, co-chief operating officer of WBA, sits on the board. AmerisourceBergen provides pharmaceutical products, services and business solutions to pharmacies and health-care organizations.
The two companies said in a joint statement Wednesday that AmerisourceBergen’s acquisition of Alliance Healthcare will provide “even stronger support” for pharmacies and pharmacists across the globe, and “integrated solutions” for pharmaceutical manufacturers.
WBA said the sale of its wholesale pharmaceuticals division would enable it to “increase its focus on growing and transforming its core retail pharmacy and health-care businesses, facilitate higher growth investments and accelerate its strategic goals.”
Stefano Pessina, executive vice-chairman and chief executive officer of WBA, said the transaction will fuel future investments “to grow and transform our core retail pharmacy and health-care businesses, and is EPS [earnings per share] accretive long-term” for the company.
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Although Pessina did not specify how WBA would use the $6.5 billion, an industry source familiar with the deal said the cash would be “a big positive” for the retail side of the business which is organized into wellness, beauty and pharmacy divisions.
Boots, which is undergoing a strategic transformation and refurbishing its beauty and wellness stores to compete with the likes of Sephora and Ulta, has been suffering — like many physical high street retailers in Britain — from the rise in online shopping.
Although many Boots pharmacies remained open in the U.K. throughout the nationwide lockdowns, the chain suffered nonetheless from the impact of COVID-19 on business.
In July, Boots announced a major restructuring across its head office, store teams and opticians teams, saying it planned to reduce head count by more than 4,000, or seven per cent of the workforce, and close 48 Boots Opticians stores.
At the same time the retailer said it had invested in, and doubled, the capacity of its e-commerce site, Boots.com, during the first lockdown period last year. Boots added that the ongoing transformation plan would see “continued investment into online and digital services as a key driver of growth for the business.”
Under the terms of Wednesday’s deal, AmerisourceBergen will pay WBA $6.275 billion in cash, subject to a customary working capital and net-debt adjustment, and deliver two million shares of AmerisourceBergen common stock at the closing of the transaction.
AmerisourceBergen said it expects to fund the cash purchase price through a combination of cash on hand and new debt financing.
The transaction, which is expected to close by AmerisourceBergen’s fiscal year-end 2021, is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals.
WBA said its operations in China, Italy and Germany are not part of the transaction.
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