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Walgreens to use $3.5 billion bridge facility, cash, stock to buy 45% stake in Alliance Boots
By Lisa Kerner
Charlotte, N.C., June 19 - Walgreen Co. announced it will invest about $6.7 billion in cash and stock to acquire a 45% equity ownership stake in Alliance Boots GmbH.
Payment will consist of $4.0 billion in cash and 83.4 million shares of Walgreens common stock valued at $2.7 billion at the Walgreens closing share price of $31.96 on Monday, a company news release said.
Walgreens expects to fund the cash consideration with a combination of new short- and intermediate-term debt and cash on the its balance sheet, Walgreens chief financial officer Wade Miquelon said during a conference call on Tuesday.
On Monday, Walgreens entered into an agreement for a four-month commitment for a $3.5 billion 364-day unsecured bridge loan facility with Goldman Sachs Bank USA, Bank of America Merrill Lynch and Bank of America, N.A. The loan is subject to a two-month extension for regulatory reasons, according to an 8-K filing with the Securities and Exchange Commission.
Walgreens, a Deerfield, Ill.-based drugstore chain, said it expects to subsequently replace the bridge facility with permanent financing.
Under the terms of the companies' strategic transaction, Walgreens has three years to acquire the remaining 55% of Alliance Boots. At the current Walgreens share price and at an exchange rate of 1.55 dollars per pound, the second step of the transaction would be valued at about $9.5 billion in cash and stock, plus the assumption of Alliance Boots' then-outstanding debt.
The initial transaction is expected to close by Sept. 1.
Alliance Boots is a pharmacy-led health and beauty group. Its operational hub is located in Nottingham, England.
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