Walgreens Boots Alliance (NASDAQ:WBA) announced it has unloaded AmerisourceBergen (NYSE:ABC) common shares, raking in around $644M. Also, pending the closing of the stock sale, AmerisourceBergen has committed to repurchasing its common stock from Walgreens for roughly $50M. Nevertheless, Walgreens’ ownership of AmerisourceBergen’s common stock still remains around 17%.
Engaging in the variable prepaid forward contracts allows Walgreens not only to enhance its current liquidity but also to retain voting and dividend rights in AmerisourceBergen’s common stock. It also provides the opportunity to benefit from potential stock price gains during the contract period. Walgreens aims to use the proceeds to service debt and for other general corporate activities.
By Q4 2025, when the contracts are set to be settled, Walgreens plans to deliver a total of 4.59M AmerisourceBergen common shares to the contract counterparties. Depending on the share price at that time, Walgreens could pocket up to an additional $204M. Walgreens assures that this sale doesn’t affect the enduring partnership between the two companies.
Overall, it appears that analysts prefer ABC stock over WBA stock, as the former is rated a Strong Buy while the latter is considered a Hold. Interestingly, though, WBA has more upside potential thanks to its average price target of $39.91, which implies over 28% upside potential.
