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With Amazon Looming, Walgreens May Buy This Giant Distributor

With Amazon Looming, Walgreens May Buy This Giant Distributor

Walgreens Boots Alliance is reportedly in talks to buy the rest of a $21 billion distributor it doesn’t yet own amid reports that Amazon may be getting into the pharmacy business.

The Wall Street Journal was first to report Walgreen’s (NASDAQ: WBA) “takeover approach” to global drug distributor, AmerisourceBergen Corp (NYSE: ABC), though talks are still in the early stages and there is not yet an offer on the table.

Walgreens already owns roughly 26% of the company. It began buying shares of AmerisourceBergen in 2013 when it entered a 10-year supply agreement with the company.

A deal for the rest of AmerisourceBergen may be Walgreens’ response to Amazon getting into the pharmacy business. Morgan Stanley published a report last October that speculated Amazon may open “virtual retail pharmacies” by 2019, a move that would pose a major threat to major brick-and-mortar drugstore chains in the U.S.



Walgreens runs more than 13,200 stores in 11 countries and is the largest drugstore chain in the U.S., and thus could likely be the worst hit by Amazon’s entry into the pharmacy space.

Walgreens’ CEO Stefano Pessina calls Amazon a “logistics company,” and said at a Forbes event that the “only way” for Amazon to “enter our space would be to buy or to team up.”

AmerisourceBergen’s specialty is the healthcare supply chain, which is something Amazon knows very little about. By buying the rest of ABC, Walgreens may be making a major play to cut off an avenue for Amazon given the distributor’s global relationships with healthcare companies and supply channels around the world.



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