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Cencora, Inc. 8-K Report, Material Agreement (Aug 25, 2016)

Filed August 25, 2016For Securities:COR

Summary

Cencora, Inc. (formerly AmerisourceBergen Corporation) filed an 8-K on August 25, 2016, primarily detailing the amendment and subsequent full exercise of warrants previously issued to affiliates of Walgreens Boots Alliance, Inc. (WBA). The company amended two warrants (Warrant No. 2A and Warrant No. 2B) to allow for immediate exercise starting August 25, 2016, at the original exercise price of $52.50 per share. All other terms of the warrants remained unchanged. Following the amendment, WBA Holdings fully exercised these warrants, paying approximately $1.19 billion for 22,696,912 shares of Cencora's common stock. The company stated that it does not expect any dilutive impact from this issuance due to prior hedging activities, including capped call options and share repurchase programs. The proceeds will be used to offset dilution, partially fund the repayment of $600 million in senior notes due in May 2017, and for general corporate purposes.

Key Highlights

  • 1Amendment and immediate exercise of warrants originally issued to WBA affiliates.
  • 2WBA Holdings exercised warrants for 22,696,912 shares of common stock.
  • 3Total proceeds from warrant exercise amounted to approximately $1.19 billion.
  • 4The exercise price for the warrants was $52.50 per share.
  • 5Company expects no dilutive impact on earnings per share due to prior hedging strategies.
  • 6Proceeds to be used for dilution offset, debt repayment ($600M notes due 2017), and general corporate purposes.
  • 7Shares issued under Section 4(2) of the Securities Act of 1933 (private placement exemption).

Frequently Asked Questions

The primary event was the amendment of existing warrants held by Walgreens Boots Alliance Holdings LLC (WBA Holdings) and their subsequent full exercise. This resulted in the issuance of approximately 22.7 million shares of Cencora's common stock to WBA Holdings.

Cencora received approximately $1.19 billion from the exercise. The company plans to use these proceeds to offset the dilution from the share issuance through hedging activities, partially fund the repayment of $600 million in senior notes due in May 2017, and for general corporate purposes.

Cencora stated that it does not expect any dilutive impact from this issuance. This is due to previously announced hedging strategies, including the purchase of shares under issuer capped call option transactions and existing special share repurchase programs designed to mitigate dilution.

No, the shares issued upon exercise of the warrants were not registered under the Securities Act of 1933. The issuance was made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act, indicating a private placement to a sophisticated investor.