Retail pharmacy chain Walgreens Boots Alliance (NASDAQ:WBA) further reduced its stake in drug distributor AmerisourceBergen Corporation (NYSE:ABC) through the sale of shares worth $1 billion. The company intends to use the proceeds from this sale to reduce its debt and fund its strategic initiatives, including the acquisition of Summit Health by Walgreens-backed VillageMD.
The sale includes $200 million worth ABC stock that AmerisourceBergen will repurchase from Walgreens. Following the sale, Walgreens’ stake in AmerisourceBergen has come down to 17% from 20%. The company clarified that the sale has no impact on its long-term relationship with AmerisourceBergen.
Last month, Walgreens reduced its stake in AmerisourceBergen to 20% from 26% through the public offering of 10 million ABC shares. This sale was announced just after VillageMD inked a definitive agreement to acquire Summit Health for $8.9 billion. WBA stated that it will invest $3.5 billion through an even mix of debt and equity to support this deal.
Walgreens is seeking further growth in the healthcare space. Last year, the company became the majority owner of VillageMD through an investment of $5.2 billion. Walgreens is opening Village Medical clinics at its existing drugstores, with the goal to have at least 600 primary-care clinics in over 30 U.S. markets by 2025 and 1,000 clinics by 2027. It is on track to open 200 co-located clinics with VillageMD by the end of this year.
Is WBA Stock a Buy?
Wall Street is sidelined on Walgreens stock, with a Hold consensus rating based on three Buys, seven Holds, and one Sell. The average WBA price target of $41.20 suggests that the stock is fairly priced at current levels. Shares have declined nearly 22% year-to-date.
