Three more years added to 10-year pact unveiled in 2013

VALLEY FORGE, Pa. — AmerisourceBergen Corp. has extended its strategic partnership with Walgreens Boots Alliance (WBA) Inc. for another three years.

AmerisourceBergen said Thursday that its drug distribution contract with WBA and relationship with Walgreens Boots Alliance Development (WBAD) have been lengthened to 2026. AmerisourceBergen and then-merger partners Walgreen Co. and Alliance Boots had announced a 10-year agreement in March 2013.

The extension includes an enhanced commitment from WBA to use AmerisourceBergen as its key U.S. distribution partner. AmerisourceBergen said it also has agreed to make certain working capital investments in the relationship and proceed with further capital investments in its distribution network.

“We are thrilled to extend our innovative and highly successful partnership with Walgreens Boots Alliance, and we look forward to continuing to reap the rewards of this unique and collaborative relationship well beyond the original 10-year term,” AmerisourceBergen chairman, president and chief executive officer Steven Collis said in a statement.

Under the pact unveiled in 2013, Walgreens and AmerisourceBergen expanded their relationship to a 10-year primary distribution agreement for both branded and generic drugs. That September, AmerisourceBergen began distributing branded drugs that Walgreens had historically sourced from other distributors and suppliers. The following year, that distribution started to include generic drugs, which Walgreens had typically has self-distributed.

The agreement also included global supply-chain opportunities for AmerisourceBergen, which began accessing generics and related pharmaceuticals through the WBAD joint venture of Walgreens and Alliance Boots.

In another component of the 2013 pact, Walgreens and Alliance Boots were granted the right to buy a minority ownership interest in AmerisourceBergen, beginning with the right to buy up to 7% of the fully diluted equity of AmerisourceBergen in the open market.

Under the terms of that agreement, WBA has since enlarged its stake in AmerisourceBergen. In March of this year, WBA exercised warrants to buy approximately 22.7 million shares of AmerisourceBergen common stock for about $1.17 billion. The move gave WBA about 34.2 million shares, or a nearly 15% equity interest, in AmerisourceBergen. WBA also holds warrants to buy another 22,696,912 shares of AmerisourceBergen common stock, which can be exercised starting in March 2017.