8-KMaterial AgreementsSecurities & ListingShareholder Matters+2

Cencora, Inc. 8-K Report, Material Agreement (Mar 20, 2013)

Filed March 20, 2013For Securities:COR

Summary

On March 19, 2013, AmerisourceBergen Corporation (now Cencora, Inc.) announced a significant, long-term strategic relationship with Walgreen Co. and Alliance Boots GmbH. This multi-faceted agreement includes a ten-year primary pharmaceutical distribution arrangement, a joint venture for generic drug access, and expanded opportunities for AmerisourceBergen's specialty and manufacturer services. Notably, Walgreens and Alliance Boots secured rights to acquire a substantial equity stake in AmerisourceBergen through open market purchases and warrants, potentially representing up to approximately 7% and 16% of outstanding shares, respectively. This strategic alliance is expected to drive growth for AmerisourceBergen, particularly in its international and specialty businesses, by leveraging the scale and reach of Walgreens and Alliance Boots. The terms of the agreement are subject to regulatory approvals, including antitrust clearance. The filing also details governance arrangements, board representation rights for Walgreens and Alliance Boots based on their equity holdings, and restrictions on stock transfers and future acquisitions by the partners, designed to maintain a stable and strategic relationship. Investors should monitor the progress of regulatory approvals and the subsequent equity transactions.

Key Highlights

  • 1Strategic ten-year primary pharmaceutical distribution agreement with Walgreens and Alliance Boots.
  • 2Formation of a joint venture (WBAD) to provide access to generic drugs and related pharmaceutical products.
  • 3Walgreens and Alliance Boots granted rights to purchase up to approximately 7% of AmerisourceBergen's common stock through open market transactions.
  • 4Issuance of warrants to Walgreens and Alliance Boots subsidiaries, allowing them to purchase up to approximately 16% of the company's common stock at specified prices ($51.50 and $52.50).
  • 5Walgreens is entitled to appoint one or two directors to AmerisourceBergen's Board of Directors based on their equity ownership.
  • 6Significant transfer restrictions and standstill provisions are in place for Walgreens and Alliance Boots regarding their equity holdings in AmerisourceBergen.
  • 7The transaction is subject to U.S. and foreign antitrust approvals, including Hart-Scott-Rodino clearance.

Frequently Asked Questions

The primary purpose is to establish a long-term, strategic relationship focused on pharmaceutical distribution, generic drug access through a joint venture, and growth opportunities for AmerisourceBergen's specialty and manufacturer services businesses, supported by a significant equity investment from Walgreens and Alliance Boots.

The warrants allow Walgreens and Alliance Boots to acquire a substantial equity stake in AmerisourceBergen, representing up to approximately 16% of the company's outstanding shares on a fully diluted basis. These warrants have exercise prices of $51.50 and $52.50 and become exercisable in 2016 and 2017, respectively, potentially increasing the influence of Walgreens and Alliance Boots on the company's governance and future.

Yes, the transaction is contingent upon receiving necessary U.S. and foreign antitrust approvals, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act. The agreements also outline specific termination rights and consequences if these approvals are not obtained within a certain timeframe.

The agreement grants Walgreens the right to appoint directors to AmerisourceBergen's Board of Directors. Initially, with 5% or more ownership, Walgreens can appoint one director, and with further equity acquisition or warrant exercise, they can appoint a second director. This indicates a direct impact on the company's strategic decision-making.