Walgreens reportedly in talks to acquire all of AmerisourceBergen

Walgreens Boots Alliance is in tentative talks to take over the portion of AmerisourceBergen it does not already own, sources close to the matter told the Wall Street Journal.

Background

Walgreens already owns 26% of AmerisourceBergen, which is one of the largest drug distributors in the United States, the Journal reports. AmerisourceBergen—which reported a $364.5 million profit in the fiscal year ending Sept. 30, 2017—supplies retail pharmacies as well as physicians and oncology clinics directly, via a specialty-drug business, the Journal reports.

According to the Journal, Walgreens and AmerisourceBergen in 2013 signed a 10-year, $400 billion agreement under which AmerisourceBergen serves as "the primary distributor of pharmaceuticals to Walgreen's retail, mail-order, and specialty pharmacies," while AmerisourceBergen purchases generic drugs through a Walgreens-operated group purchasing organization. That agreement has since been extended through 2026.

A Walgreens representative also serves on AmerisourceBergen's board.

Details on the potential deal

Walgreens and AmerisourceBergen are reportedly in very early-stage talks about the potential acquisition, according to the Journal. Sources told the Journal that representatives of Walgreens CEO Stefano Pessina reached out to representatives of AmerisourceBergen CEO Steven Collis about a takeover bid—although the sources cautioned that talks remain preliminary, no deal is immediately forthcoming, and the acquisition might not happen at all.

Both a spokesperson for Walgreens and a spokesperson for Amerisource declined the Journal's request for comment.

An attempt to insulate

If the deal goes through, it would be "substantial," the Journal reports: As of Monday's market close, AmerisourceBergen had a $19.6 billion market value, and Walgreens had a $67.8 billion market value.

According to the Journal, should the companies complete the deal, it would advance a trend in which pharmacies have sought to protect their business from external threats. For instance, CVS Health has signed a $69 billion agreement to acquire Aetna, a move that sources close to the deal indicated was motivated at least in part by Amazon's possible foray into the pharmacy industry, according to the Journal. Meanwhile, Walgreens has received regulatory approval to acquire nearly 2,000 Rite Aid stores, Forbes reports (Siconolfi, et. al., Wall Street Journal, 2/12; Baum, MedCity News, 2/13; Japsen, Forbes, 2/12).

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