Walgreens Boots Alliance, Inc. (WBA) completed the sale of its Alliance Healthcare businesses to AmerisourceBergen (ABC) for $6.5 billion in a cash and stock deal.
Walgreens is a global leader in retail pharmacies, providing medicines and accessible high-quality care.
The total consideration comprises $6.275 billion in cash after adjustments and 2 million shares of AmerisourceBergen.
Walgreens intends to utilize the sale proceeds to bring down the company’s debt levels, and focus on the growth of its core retail pharmacy and healthcare businesses.
Notably, the company has already reduced the debt by $3.3 billion with the repayment of the outstanding amount owed on a $3.8 billion term loan. (See Walgreens stock analysis on TipRanks)
Furthermore, the company will also use the proceeds to fund strategic initiatives announced earlier, which include the opening of 600 - 700 Village Medical at Walgreens primary care clinics and taking over a major stake in iA, a pioneer of software-enabled pharmacy automation solutions.
Walgreens Boots Alliance CEO Rosalind Brewer commented, “Completion of this transaction represents a significant step forward in our transformation and will fuel investments to grow WBA’s core retail pharmacy and healthcare businesses.”
Brewer further added, “Through these and other investments, WBA looks to bring even more innovative healthcare offerings to our customers and patients, as we further accelerate our strategic priorities.”
On May 12, Mizuho Securities analyst Ann Hynes reiterated a Hold rating and increased the price target from $47 to $55 (1.9% upside potential) on the stock.
Hynes forecasts that WBA will remain an important player in the distribution of COVID-19 vaccines, which will be accretive to earnings and valuation multiples, along with creating customer loyalty.
Overall, the stock has a Hold consensus rating based on 1 Buy and 11 Holds. The average analyst price target of $57 implies 5.6% upside potential from current levels. Shares of WBA have jumped 24% over the past year.
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