SCHEDULE 13D/A: Walgreens Boots Alliance Settles Cencora Forward Contracts, Reduces Stake to 5.4%

Walgreens Boots Alliance Holdings LLC has completed the settlement of its June 2023 variable pre-paid forward sale contracts related to Cencora, Inc. common stock, reducing its beneficial ownership to approximately 5.4%.

Summary

• Walgreens Boots Alliance Holdings LLC (WBA Holdings) settled five variable pre-paid forward sale contracts (June 2023 Transactions) with various financial institutions.
• These contracts, entered into on June 15, 2023, obligated WBA Holdings to deliver up to 2,190,000 shares of Cencora Common Stock.
• WBA Holdings initially received approximately $324.8 million in cash payments from the financial institutions upon entering the contracts.
• The June 2023 Transactions matured evenly over 15 valuation dates from March 3, 2025, to March 21, 2025.
• WBA Holdings delivered the aggregate of 2,190,000 shares of Common Stock to the financial institutions upon settlement.
• Upon settlement, WBA Holdings received an additional aggregate of approximately $103.2 million from the financial institutions.
• The proceeds from these transactions were used by Walgreens Boots Alliance (WBA) for capital allocation optimization, indebtedness reduction, liability management, and general corporate purposes.
• As of the filing of this Amendment No. 20, WBA Holdings beneficially owns 10,380,000 shares of Cencora Common Stock, representing approximately 5.4% of the total outstanding shares.
• This ownership percentage is based on 193,712,591 shares of Common Stock outstanding as of February 10, 2025, as reported by Cencora.

Sentiment

Score: 6

Explanation: The document describes a routine, pre-scheduled financial transaction that aligns with WBA's stated capital optimization goals. While it involves a reduction in stake, it's a planned divestment for strategic purposes, indicating efficient financial management rather than distress. The receipt of cash from the settlement is a positive for WBA's liquidity and debt reduction efforts.

Positives

• Walgreens Boots Alliance successfully optimized its capital allocation and reduced indebtedness through the settlement of these forward contracts.
• The company received a total of approximately $428 million ($324.8 million initial + $103.2 million upon settlement) from these transactions, which were used for strategic financial purposes.

Negatives

• Walgreens Boots Alliance's beneficial ownership in Cencora, Inc. has decreased to 5.4%, indicating a continued divestment of its stake.

Risks

• WBA may effect one or more further sales of Cencora Common Stock at any time without further notice, which could include various forms of offerings or derivative transactions.
• Decisions regarding future sales are subject to factors outside WBA's control, such as Cencora's stock price, financial condition, and general market conditions, potentially leading to unpredictable selling pressure on Cencora's shares.

Future Outlook

Walgreens Boots Alliance periodically reviews its strategic and capital allocation priorities and may effect one or more further sales of Cencora Common Stock at any time without further notice. Such sales could take various forms, including public offerings, block trades, private sales, pledges, hedges, or other derivative transactions. The ultimate number of shares that may be sold is not ascertainable and depends on various factors including market conditions and strategic considerations. WBA may also choose to early settle other previously disclosed variable pre-paid forward sale contracts.

Management Comments

• Ornella Barra remains a director of Cencora, Inc. and is expected to continue unless a Walgreens Investor Rights Termination Event occurs as defined in the A&R Shareholders Agreement.

Industry Context

This filing reflects Walgreens Boots Alliance's ongoing strategy to optimize its capital structure and reduce debt, which has included a gradual divestment of its stake in Cencora, a major pharmaceutical distribution company. This move allows WBA to reallocate capital to its core pharmacy-led health and wellbeing enterprise, while Cencora continues its operations under existing commercial agreements with WBA.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Related Party Transactions

• Existing commercial agreements between WBA and Cencora, including the US pharmaceutical distribution agreement, remain in full force and effect.
• The Amended and Restated Shareholders Agreement (A&R Shareholders Agreement) between Walgreens Boots Alliance, Inc. and Cencora, Inc. remains in effect.

Stakeholder Impact

• Shareholders of Cencora may experience potential future selling pressure on the stock if Walgreens Boots Alliance proceeds with further divestments of its remaining stake.
• WBA's shareholders benefit from the capital optimization and debt reduction efforts, potentially improving WBA's financial health.

Next Steps

• Walgreens Boots Alliance may undertake further sales of Cencora Common Stock opportunistically.
• WBA may choose to early settle other variable pre-paid forward sale contracts previously entered into and disclosed.

Key Dates

Keywords

Cencora, Walgreens Boots Alliance, SEC filing, Schedule 13D, beneficial ownership, stock sale, forward contracts, capital allocation, divestment, pharmaceutical distribution