Walgreens Buys AmerisourceBergen Shares per Warrants
Walgreens Boots Alliance, Inc. WBA announced that it has exercised warrants to purchase 22.7 million shares of AmerisourceBergen Corporation ABC for approximately $1.17 billion.
We remind investors that AmerisourceBergen had entered into an agreement with Walgreens Boots Alliance in Mar 2013. The agreement includes a 10-year pharmaceutical distribution contract with Walgreens.
The agreement also gives AmerisourceBergen access to generics and related pharmaceutical products through Walgreens Boots Alliance Development GmbH, a global sourcing joint venture between Walgreens and Alliance Boots.
In return, Walgreens’ subsidiaries were granted the right to purchase a minority equity position in the AmerisourceBergen.
With the recent exercise of these warrants, Walgreens Boots Alliance now owns 34.1 million shares or 14.9% of AmerisourceBergen’s outstanding equity. Meanwhile, Walgreens continues to hold warrants for the purchase of an additional 22.7 million shares of AmerisourceBergen common stock, which the former has the right to exercise beginning in Mar 2017.
As of Dec 31, 2015, the warrants with an exercise price of $51.50 were valued at $51.98 per share, while those with an exercise price of $52.50 were valued at $50.19 per share. Hence, the warrants were valued at a total of $2.3 billion at 2015 end. The exercise of warrants by Walgreens Boots Alliance will lead to the dilution of equity for shareholders.
AmerisourceBergen currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Corcept Therapeutics CORT and ArQule, Inc. ARQL, each sporting Zacks Rank #1 (Strong Buy).
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