Walgreens Boots Alliance, Inc. (NASDAQ:WBA) has disclosed its use of Rule 144 of the Securities Act of 1933 to sell shares of Cencora, Inc. through variable prepaid forward transactions. The sale, which took place on Thursday, resulted in immediate proceeds of approximately $424 million for the company, with potential for additional returns depending on Cencora's stock performance.
In tandem with the sale, Walgreens also conducted a share repurchase from Cencora, valued at around $250 million. Despite these financial maneuvers, Walgreens' ownership stake in Cencora remains at an estimated 15%. The transactions not only provided instant liquidity but also ensured Walgreens' voting and dividend rights in Cencora.
The variable prepaid forward contracts are set to mature in Q4 of fiscal year 2026. At that time, Walgreens plans to transfer 2.7 million shares of Cencora common stock to the contract counterparties. Depending on the prevailing stock price at the time of settlement, Walgreens could receive additional proceeds up to $137 million.
The proceeds from these transactions will be primarily allocated towards debt reduction and other general corporate purposes. This strategic move is part of Walgreens' effort to streamline its portfolio and enhance cash management.
The sale does not impact the ongoing partnership between Walgreens and Cencora that was established in 2013. Ornella Barra, COO International of WBA, will continue her role on Cencora’s Board of Directors.
Walgreens Boots Alliance is an integrated healthcare, pharmacy, and retail leader serving millions globally. Operating in eight countries, it employs approximately 330,000 individuals.
InvestingPro Insights
Walgreens Boots Alliance (WBA) is demonstrating a promising financial outlook according to InvestingPro's real-time data and insights. The company is showing a notable revenue growth of 4.81% in the last twelve months as of Q4 2023. In addition, with a market capitalization of 17.67B USD, WBA remains a prominent player in the Consumer Staples Distribution & Retail industry.
InvestingPro Tips suggest that WBA has a strong history of maintaining dividend payments, having done so for 53 consecutive years. This consistent return to shareholders, coupled with the fact that WBA is trading near its 52-week low, could make it an attractive option for dividend-focused investors.
Furthermore, InvestingPro's data indicates a high shareholder yield and a promising P/E Ratio (Adjusted) of 10.27 as of Q4 2023. This, along with the fact that WBA's net income is expected to grow this year, suggests potential for future profitability. However, prospective investors should also note that 6 analysts have recently revised their earnings predictions downwards for the upcoming period.
In total, InvestingPro offers over 13 additional tips for WBA, providing a comprehensive tool for investors to make informed decisions.
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