WALGREENS EXPANDING. Walgreens Takeover in the Works? By Todd Horwitz, Bubba Trading

 

WALGREENS EXPANDING

Walgreens Takeover in the Works?

Walgreens Boots Alliance Inc. has made a takeover approach to drug distributor AmerisourceBergen Corp., a move that could help boost profitability at the drugstore giant and insulate it against external threats in an increasingly competitive health-care landscape.
Representatives of Walgreens Chief Executive Stefano Pessina reached out several weeks ago to representatives of Amerisource CEO Steven Collis, according to people familiar with the matter. They discussed the possibility of Walgreens buying the portion of Amerisource it doesn’t already own, though there isn’t an offer on the table, the people said. The companies are in early-stage talks to combine, the people said, cautioning that no deal is imminent and there may well not be one.

The deal could be Walgreens response to the potential of online retailer Amazon entering the pharmacy business. Walgreens CEO Stefano Pessina has called Amazon a “logistics company.” “They will not come in an industry so complicated as our industry,” Pessina said in an interview with Forbes Media executive vice president Moira Forbes. “At the end of the day, Amazon is not a retailer. It is a technology company.”

But just in case Amazon does enter the pharmacy space, Walgreens appears ready with an answer. AmerisourceBergen’s specialty is the healthcare supply chain, which is something Amazon doesn’t know. Buying the rest of AmerisourceBergen could be seen as a major play by Walgreens and Pessina to cut off of an avenue for Amazon given the distributor’s global ties to healthcare companies and supply channels around the world. Amerisource has more than 150 offices around the world and ships millions of products each day.

At the Forbes event, Pessina said the “only way” for Amazon to “enter our space would be to buy or to team up.” AmerisourceBergen boasts of its healthcare expertise in distributing everything from generics to complex specialty drugs. “Right product, right time, right customer experience,” AmerisourceBergen says on its website. “With infrastructure built to enable secure, daily ordering and distribution of millions of healthcare products, we deliver peace of mind and allow our partners to focus on improving patients’ lives.”

Keep those stops tight
Todd “Bubba” Horwitz

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About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.