Walgreens is reportedly in talks to purchase AmerisourceBergen: 7 things to know

Walgreens Boots Alliance is reportedly in talks to purchase the portion of AmerisourceBergen it doesn't already own — a move that could help the company in the increasingly competitive healthcare landscape, according to The Wall Street Journal.

Here are seven things to know.

1. Walgreens currently owns about 26 percent of Amerisource, one of the nation's largest drug distributors, and has a representative on Amerisource's board. The two companies reportedly discussed the possibility of a takeover approach, in which Walgreens would purchase the remainder of company.

2. Walgreens CEO Stefano Passina reached out several weeks ago to representatives of Amerisource to discuss the takeover approach, according to The Wall Street Journal who cited people familiar with the matter.  The people familiar said the company is in early stage talks, meaning no offer is currently on the table and there may not be one.

3. If the talks progress and a deal is made, it would be substantial, according to the report. As of Monday's market close, Amerisource had a $19.6 billion market value and Walgreens had $67.8 billion.

4. Amerisource not only provides supplies to retail pharmacies, but it also has a specialty business that distributes expensive cancer treatments and other specialty drugs directly to cancer clinics and physicians.

5. Last year, 30 percent of Amerisource's revenue came from Walgreens, which makes the drugstore chain Amerisource's largest customer. The two companies entered into a 10-year contract in 2013, which has been expanded to 2026. Under the contract, Amerisource is the primary distributor of pharmaceuticals to Walgreens and Amerisource purchases its generic drugs through a Walgreens-owned group purchasing organization.

6. This potential deal for Walgreens would enable the company to keep more of the margin of the drugs it sells because it acquired a link in its supply chain.

7. The talks come at a time when drugstore owners are seeking ways to remain competitive as external disrupters enter into the healthcare arena. In December, CVS Health, Walgreen's rival, signed a $69 billion deal to acquire health insurer Aetna — a deal people familiar with the matter say was driven by Amazon's potential entry into healthcare. 

More articles on supply chain:
Amazon pushes to become a major hospital supplier: 7 things to know
White House advisers propose fast-tracking reviews of brand-name drugs to lower costs: 6 things to know
Pfizer's opioid-filled syringes hit another manufacturing snag: 6 things to know

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