Exclusive: AmerisourceBergen eyes Walgreens' drug distribution business - sources

By Rebecca Spalding

(Reuters) - AmerisourceBergen Corp, one of the largest U.S. drug distributors, has approached Walgreens Boots Alliance Inc to explore a deal for its pharmaceutical wholesaling division, people familiar with the matter said on Monday.

Walgreens owns about 27% of AmerisourceBergen and is its biggest customer.

The two companies have explored various possibilities for combining operations in recent years, including a sale of AmerisourceBergen to Walgreens, on the theory that their drug distribution businesses would be better positioned to withstand competitive price pressures through even bigger scale.

The coronavirus pandemic has weighed on Walgreens' retail business since then, however. Its shares have fallen more than 28 percent this year, compared to a 12% drop in the S&P 500 index due to the outbreak. AmerisourceBergen shares are flat year-to-date.

AmerisourceBergen is willing to pay about $6 billion for the Walgreens pharmaceutical wholesale business, which operates mainly under the Alliance Healthcare brand, one of the sources said.

There is no certainty that the two companies will negotiate a deal, the sources added, asking not to be identified because the matter is confidential.

Walgreens and AmerisourceBergen, which have market capitalizations of $37 billion and $18 billion, respectively, did not immediately respond to requests for comment.

While Walgreens stores have remained open during the pandemic, the company said in April that sales at its locations had fallen as consumers stay home, often because they are avoiding doctor visits and have fewer prescriptions to fill.

Walgreens has lost about half its value over the last five years amid growing distress in the retail sector and competition from online retailers, including Amazon.com Inc .

Last year, the debt-laden pharmacy chain explored going private and held preliminary discussions with private equity firms, people familiar with the matter said at the time.

A full or partial divestment of Alliance Healthcare would give Walgreens a cash injection and make it easier for Chief Executive Stefano Pessina, the company's largest shareholder with a 16% stake, to take it private.

The Deerfield, Illinois-based company, which operates the Walgreens and Duane Reade pharmacies in the United States and Boots in Britain, has more than 18,750 stores in over 25 countries.

It has an agreement to source branded and generic drugs from AmerisourceBergen in the United States. It also allows AmerisourceBergen to access generic medicines through its global sourcing network.

(Reporting by Rebecca Spalding in New York; editing by Grant McCool and Sonya Hepinstall)