Why is Cencora repurchasing shares from Walgreens Boots Alliance Holdings LLC?

Cencora is repurchasing shares as part of its established share repurchase program. This specific transaction is also linked to the Selling Stockholder (Walgreens Boots Alliance Holdings LLC) entering into variable pre-paid forward sale contracts with financial institutions.

What is the financial impact of this repurchase on Cencora?

The company is paying approximately $250 million for the repurchase. This will reduce the number of outstanding shares, which can potentially increase earnings per share, and the shares will be held as treasury stock. The exact financial implications will depend on the company's overall capital allocation strategy and market conditions.

Will this transaction affect the ownership percentage of other shareholders?

While the total number of outstanding shares will decrease, the primary impact on ownership percentages will be for the Selling Stockholder. After the repurchase, Walgreens Boots Alliance Holdings LLC's ownership will be reduced to approximately 15% of the total outstanding shares, down from a prior, higher percentage.

What are variable pre-paid forward sale contracts?

These are financial contracts where a party agrees to sell shares at a future date, with the price often determined by a formula that can vary. They are typically used by large shareholders to manage their holdings and obtain liquidity without immediately selling shares on the open market. The details of these contracts are not fully disclosed in this 8-K, but they are the catalyst for this specific repurchase.

COR 8-K: Material Agreements

Summary

Cencora, Inc. (COR) announced a significant share repurchase agreement with Walgreens Boots Alliance Holdings LLC (the Selling Stockholder). The company will repurchase approximately 1.28 million shares of its common stock directly from the Selling Stockholder for an aggregate price of $250 million. This transaction is expected to close on November 14, 2023, and the repurchased shares will be held in treasury as part of the company's ongoing share repurchase program. The repurchase is being executed in connection with the Selling Stockholder entering into variable pre-paid forward sale contracts. Following the completion of this repurchase, Walgreens Boots Alliance Holdings LLC will own approximately 15% of Cencora's outstanding common stock, representing about 30.5 million shares. This strategic move by Cencora signals a commitment to returning value to shareholders and managing its capital structure effectively.

Key Highlights

1Cencora to repurchase 1,279,590 shares of common stock from Walgreens Boots Alliance Holdings LLC.
2The total transaction value is approximately $250 million.
3The share repurchase is expected to close on November 14, 2023.
4Repurchased shares will be held in treasury, consistent with the company's share repurchase program.
5This transaction is linked to the Selling Stockholder entering into variable pre-paid forward sale contracts.
6Post-repurchase, Walgreens Boots Alliance Holdings LLC will own approximately 15% of Cencora's outstanding shares.
7The filing includes the Share Repurchase Agreement as an exhibit.

Cencora, Inc. 8-K Report, Material Agreement (Nov 14, 2023)

Summary

Key Highlights

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