AmerisourceBergen Corporation ABC today announced that its Board of
Directors has authorized a special $2.4 billion share repurchase program
intended to further enable the execution of the Company's previously
announced warrant hedging strategy. The new special program will be used to
further mitigate the dilutive effect on the ownership interests of
stockholders that may result from the issuance of common stock upon exercise
of the warrants issued in March 2013.
The Company recently completed the April 2015 $1.0 billion special share
repurchase program, and had previously completed the May 2014 $650 million
special share repurchase program. The Company expects that the new $2.4
billion program should be sufficient to offset the remaining share dilution
from future warrant exercises, with approximately $140 million expected to
be used in connection with call options expiring in October 2015,
approximately $700 million expected to be used in connection with capped
calls expiring in 2016, and approximately $715 million expected to be used
in connection with capped calls expiring in 2017. The remainder available
under the new special program would be used for discretionary repurchases
intended to supplement these hedging activities.
"We are very pleased that we have recently made significant progress towards
further offsetting the expected impact from warrant exercises in 2017, after
having essentially fully covered the expected impact from the 2016 warrants
during our June 2015 quarter," said Steven H. Collis, AmerisourceBergen
President and Chief Executive Officer. "With our cash flow generation, we
have tremendous flexibility to mitigate the remaining impact of the warrants
either through share repurchases, hedging activities, or strategic
acquisitions."
Share repurchases under the new special program will be funded by proceeds
from the warrant exercises, and by cash on hand. Share repurchases under the
special program are expected to take place in the open market as well as by
other means, such as through the exercise of the call options or capped
calls that the Company has previously entered into, or other contracts we
may enter into in the future. The share repurchases are expected to occur
over an extended period of time, subject to market conditions.
As previously disclosed, the Company intends to continue to exclude the
impact of the share repurchases under its special programs from the
presentation of adjusted diluted earnings per share from continuing
operations until the warrants are exercised or expire. The exclusion of the
special share repurchases is consistent with the Company's exclusion of the
accounting dilution resulting from the impact of the warrants in the
calculation of the Company's adjusted diluted earnings per share. As a
result, share repurchases under the special programs will not have an impact
on the Company's expectations for the range of its adjusted diluted earnings
per share from continuing operations for fiscal 2015 or fiscal 2016, which
were both previously disclosed in its earnings release dated July 23, 2015.
The adjusted earnings per share guidance from continuing operations
continues to include an assumption that the Company will repurchase $300
million of its common stock in fiscal 2015 and $300 million in fiscal 2016
under its previously announced regular share repurchase programs, subject to
market conditions.
As previously disclosed, subsidiaries of Walgreens Boots Alliance, Inc. were
collectively issued warrants to purchase up to 22,696,912 shares of the
Company's common stock at an exercise price of $51.50 per share exercisable
during a six month period beginning in March 2016 and warrants to purchase
up to 22,696,912 shares of the Company's common stock at an exercise price
of $52.50 per share exercisable during a six-month period beginning in March
2017.
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