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ABC > SEC Filings for ABC > Form 8-K on 20-Mar-2013All Recent SEC Filings

Show all filings for AMERISOURCEBERGEN CORP | Request a Trial to NEW EDGAR Online Pro



Entry into a Material Definitive Agreement, Unregistered Sale of Equity Se

Item 1.01. Entry into a Material Definitive Agreement.

Transaction Overview

On March 19, 2013, AmerisourceBergen Corporation (the "Company") announced that it is entering into a strategic, long-term relationship with Walgreen Co. ("Walgreens") and Alliance Boots GmbH ("Alliance Boots"), which includes: a ten-year comprehensive primary pharmaceutical distribution arrangement; access to generic drugs and related pharmaceutical products through the Walgreens Boots Alliance Development joint venture ("WBAD"); and opportunities to accelerate the Company's efforts to grow its specialty and manufacturer services businesses domestically and internationally. In furtherance of the strategic relationship, Walgreens and Alliance Boots have been granted rights to purchase up to 19,859,795 shares of the Company's common stock, par value $0.01 per share ("Common Stock"), in open market transactions, up to 22,696,912 shares of Common Stock pursuant to a warrant with an exercise price of $51.50 and 22,696,912 shares of Common Stock pursuant to a warrant with an exercise price of $52.50, all of which is described in greater detail below. The parties have also agreed to discuss the possibility of exploring several international opportunities.

The Framework Agreement

In connection with the strategic, long-term relationship, the Company, Walgreens and Alliance Boots entered into a Framework Agreement, dated as of March 18, 2013 (the "Framework Agreement"). Under the Framework Agreement, the Company has granted Walgreens and Alliance Boots the right to purchase an equity position in the Company through open market transactions and issued warrants to wholly-owned subsidiaries of each of Walgreens and Alliance Boots. The Framework Agreement also addresses the overall structure of the transactions between the parties (as described in more detail below). The following description of the Framework Agreement is qualified in its entirety by reference to the full text of the Framework Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

The Framework Agreement provides, among other things, that Walgreens (or any of its wholly-owned subsidiaries, or Alliance Boots or any of its wholly-owned subsidiaries) has the right to acquire in open market transactions up to 19,859,795 shares of Common Stock (such shares, the "Initial Open Market Shares"), which represents approximately 7% of the outstanding Common Stock on a fully-diluted basis, assuming exercise in full of the Warrants (as defined below). The Framework Agreement also provides that, if at any time during the period when Warrant 1 (as defined below) is exercisable the market price of Common Stock is less than the then-applicable exercise price of Warrant 1, the holders of Warrant 1 shall have the right to acquire (either directly or through Walgreens or Alliance Boots or either of their wholly-owned subsidiaries) in open market transactions up to an aggregate total of 14,185,570 additional shares of Common Stock (the "Additional Open Market Shares", and together with the Initial Open Market Shares, the "Open Market Purchase Rights"), which represents approximately 5% of the outstanding Common Stock on a fully-diluted basis, assuming exercise in full of the Warrants. The number of Initial Open Market Shares and Additional Open Market Shares Walgreens and Alliance

Boots are entitled to purchase is subject to adjustment for stock splits, stock dividends, reclassifications and certain issuances of Common Stock (or securities convertible into or exercisable for Common Stock). The number of shares issuable upon the exercise of Warrant 1 is reduced on a one-for-one basis by acquisitions of Additional Open Market Shares.

The purchase of the Initial Open Market Shares and the Additional Open Market Shares and the exercise of the Warrants (the "Equity Transactions") are subject to the receipt of certain approvals required under U.S. and foreign antitrust laws, including the expiration or early termination of the applicable waiting periods required pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act").

In the event that (1) antitrust approval for the Equity Transactions is not received within one year of the initial filings made pursuant to the HSR Act, or
(2) any other antitrust approval necessary to allow Walgreens and/or Alliance Boots to acquire up to 25% of the Common Stock is not obtained within one year of the applicable filing, then:

the Company may cancel any unexercised Warrants and Open Market Purchase Rights;

Walgreens may cause the term of the distribution arrangement (the "Distribution Agreement") to be reduced to the greater of (A) a four-year term and (B) two years from the date it elects to exercise this termination right; and

either the Company or WBAD may terminate the Company's access to generic drugs and related pharmaceutical products through WBAD (the agreement governing such relationship, the "Generics Agreement").

In the event that other antitrust approvals are required to complete the Equity Transactions and such approvals are not received within one year of the applicable filing, the Investors (as defined below) can offer to sell to the Company the portion of Warrant 2 (as defined below) that cannot be exercised by the Investors. If the Company does not elect to purchase the relevant portion . . .

Item 3.02. Unregistered Sales of Equity Securities

The information described under "Transaction Overview" and "The Warrants" in Item 1.01 above is incorporated herein by reference.

Item 3.03. Material Modifications to Rights of Security Holders

The information described under Item 1.01 and Item 3.02 above is incorporated herein by reference.

Item 7.01. Regulation FD Disclosure

Press Release

On March 19, 2013, the Company issued a news release announcing its entry into a long-term, strategic relationship with Walgreens and Alliance Boots. A copy of the news release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference

AmerisourceBergen Corporation's Cautionary Note Regarding Forward-Looking Statements

Statements in this release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast," "would," "could," "should," "can," "will," "project," "intend," "plan," "continue," "sustain," "synergy", "on track," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. These forward-looking statements are not guarantees of future performance, are based on assumptions that could prove incorrect or could cause actual results to vary materially from those indicated, and are subject to risks and uncertainties, including: the failure to obtain the required U.S. and foreign antitrust regulatory approvals for the equity investments by Walgreens and Alliance Boots in AmerisourceBergen, the occurrence of any event, change or other circumstance that could give rise to the termination, cross-termination or modification of any of the transaction documents, including, among others, the Distribution Agreement or the Generics Agreement, an impact on AmerisourceBergen's earnings per share resulting from the exercise of the Warrants, the disruption of AmerisourceBergen's plans and operations as a result of the transaction, the inability to realize anticipated synergies, including synergies resulting from participation in the Walgreens Boots Alliance Development GmbH joint venture, potential operating dis-synergies, disruption resulting from potential vendor, payor and customer reaction to the transaction, the inability to achieve anticipated financial results, unexpected costs, fees, expenses and charges incurred by AmerisourceBergen related to the transaction, the disruption of AmerisourceBergen's cash flow and ability to return value to its stockholders in accordance with its past practices, risks associated with international business operations, changes in vendor, payer and customer relationships and terms, the reduction of AmerisourceBergen's operational, strategic or financial flexibility, and other factors described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, AmerisouceBergen does not undertake, and expressly disclaims, any duty or obligation to publicly update any forward-looking statement after the date of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits. The following Exhibits are provided as part of this Report on Form 8-K:

Exhibit No.                          Description of Exhibit

    4.1       Warrant issued on March 18, 2013.

    4.2       Warrant issued on March 18, 2013.

    4.3       Warrant issued on March 18, 2013.

    4.4       Warrant issued on March 18, 2013.

   10.1       Framework Agreement, dated as of March 18, 2013, by and among the
              Company, Walgreen Co. and Alliance Boots GmbH.

   10.2       Shareholders Agreement, dated as of March 18, 2013, by and among the
              Company, Walgreen Co. and Alliance Boots GmbH.

   99.1       News Release, dated March 19, 2013, of the Company.

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