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AmerisourceBergen plans $650 million special buyback program
May 19th, 2014
VALLEY FORGE, Pa. – The board of AmerisourceBergen Corp. has authorized a special $650 million share repurchase program in connection with warrants issued to Walgreen Co. and Alliance Boots GmbH under the companies' strategic partnership.
AmerisourceBergen said Monday that the special program will be used to lessen the potentially dilutive effect on the ownership interests of shareholder that may result from the issuance of common stock when the warrants, issued in March 2013, are exercised.
As part of the partnership announced last year, Walgreens and Alliance Boots were collectively issued warrants to buy up to 22,696,912 shares of AmerisourceBergen's common stock at $51.50 per share exercisable during a six-month period starting in March 2016. They also were issued warrants to purchase up to 22,696,912 shares of AmerisourceBergen's common stock at $52.50 per share exercisable during a six-month period beginning in March 2017.
According to AmerisourceBergen, the stock repurchases under the special program are expected to be done over an extended period of time, subject to market conditions. Once completed, those repurchases — along with issuer capped call option transactions described in the company's 10-Q report for the fiscal quarter ended March 31 — are expected to mitigate about 80% of the potentially dilutive effect that the issuance of shares upon exercise of the warrants could have, the company reported.
Additional opportunities to mitigate any remaining potentially dilutive effect of the warrants will be explored, AmerisourceBergen said. The company added that it expects to buy back $500 million of its common stock in fiscal 2014 under its previously announced share repurchase programs, subject to market conditions.