AmerisourceBergen exits Canadian drug distribution


How does the divestiture fit with ABC's new alliance with Walgreens and Alliance Boots?

Following its dramatic alignment with Walgreens and Alliance Boots, AmerisourceBergen Corp. (Valley Forge, PA) has announced the sale of its Canadian distribution assets (but not its specialty-related businesses) to Kohl & Frisch Ltd, a Canadian full-line distributor. The deal, worth between $80-$100 million, will be partially financed by ABC, which also says the sale will result in an impairment charge of $160-180 million in Q2 2013 statement. ABC hinted at less-than stellar performance from the unit in its end-of-Q1 statement, saying that results were impacted by “disappointing performance in our Canadian distribution business.” With the divestiture, ABC expects better earnings for the current fiscal year, raising its earnings estimate by 8-10 cts per share.

On March 19, ABC and Walgreens announced a 10-year supply agreement; with Walgreens’ existing relationship with Alliance Boots, and with an investment in ABC by those companies, a multinational drug-distribution and —retailing juggernaut is being formed. Interestingly, neither of ABC’s new partners has a substantial stake in Canada and so, even though global distribution and retailing is the promise of the alignment, Canada won’t be part of that for the foreseeable future. A contributing factor might also be a new effort by Canadian provinces to rein in generic drug prices, which studies have shown tend to be higher than in other nations.

In late 2012, ABC also announced a planned divestiture of AndersonBrecon, a contract packaging business it has grown by combining its Anderson Packaging unit (Rockford, IL) with Brecon Packaging (Herefordshire, UK). No buyer has yet come forward.

Related Videos
© 2024 MJH Life Sciences

All rights reserved.