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AmerisourceBergen To Acquire Majority Of Walgreens' Alliance Healthcare Businesses - Quick Facts

AmerisourceBergen Corp. (ABC) and Walgreens Boots Alliance, Inc. (WBA) announced Wednesday strategic agreements under which AmerisourceBergen will acquire the majority of Walgreens' Alliance Healthcare businesses for about $6.5 billion, comprised of $6.275 billion in cash and 2 million shares of AmerisourceBergen common stock.

The cash consideration is subject to a customary working capital and net-debt adjustment. The transaction has been approved by the AmerisourceBergen and Walgreens Boots Alliance Boards of Directors.

AmerisourceBergen expects to fund the cash purchase price through a combination of cash on hand and new debt financing.

The transaction, which is expected to close by AmerisourceBergen's fiscal year-end 2021, is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals. Walgreens Boots Alliance's operations in China, Italy and Germany are not part of this transaction.

Upon closing, the acquisition of Alliance Healthcare is expected to deliver high-teens percentage accretion to AmerisourceBergen's adjusted diluted EPS in the first fiscal year. AmerisourceBergen expects synergies from the acquisition of Alliance Healthcare to ramp to an annual run-rate of $75 million in the fourth year.

Effective from Walgreens Boots Alliance second quarter fiscal 2021 earnings, the businesses sold will be classified as "businesses held for sale" with fiscal 2020 revenues of approximately $19 billion, and adjusted EBITDA of approximately $540 million.

Walgreens Boots Alliance expects fiscal 2021 adjusted EBITDA to be in the range of $575 million to $580 million for these Alliance Healthcare businesses. The transaction will be slightly dilutive in the current financial year for Walgreens Boots Alliance, but will be accretive longer-term.

In addition to this transaction, the two companies have agreed to strengthen their strategic partnership by extending and expanding their commercial agreements.

Their U.S. distribution agreement will be extended by three years until 2029 and their partnership is being expanded to include a commitment to pursue additional opportunities in sourcing and distribution. Furthermore, Alliance Healthcare UK will remain the distribution partner of Boots until 2031. Together, these agreements are expected to create incremental growth, synergies and efficiencies.

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