Walgreens in discussion with AmerisourceBergen over acquisition pact

Walgreens Boots Alliance, Inc., operating as a pharmacy-led healthcare firm, has apparently made a bid to acquire AmerisourceBergen Corporation. The deal between Walgreens and the U.S. based drug wholesale firm has been speculated to prove rather beneficial for the regional healthcare sector. According to Reuters, AmerisourceBergen share price increased by 15.7% after the news Walgreen’s plans to acquire the firm hit the tabloids. Industry analysts are of the view that high medicine costs, threat from online retailers, and amendments in the U.S. Affordable Care Act may have prompted reputed drug companies to sign on such deals.

According to an article in the CNBC, Walgreens’ deal follows the acquisition agreement signed between the U.S. drugstore chain operator CVS Health Corporation and Aetna Inc., worth USD 69 billion in 2017. This purchase deal between Walgreens & AmerisourceBergen is expected to be the second such deal across the drug supply chain sector. Reportedly, such acquisitions witnessed across the drugstore supply chain business exhibit a gradual shift toward vertical consolidation.

Sources state that both these U.S. based pharmaceutical firms are already in close association, with AmerisourceBergen signing a ten-year contract with Walgreen and Alliance Boots in March 2013 for distributing drugs to the retail pharmacy chain along with its international health products joint project.  In January this year, Walgreens has stated a decline in its retail same-store revenues for the sixth straight quarter and a dip in its gross income from the U.S. business. Against this, AmerisourceBergen announced a threefold increase in the quarterly revenue tallying to USD 861.9 million supported by USD 587.6 million tax incentives.

It is being speculated that Walgreens is likely to majorly benefit via this deal and increase its profits through purchasing capacity with a generic & branded drug manufacturing firm such as AmerisourceBergen. Reportedly, Walgreens may fund a major part of the deal through debt and is forecast to accrue substantial returns.