AmerisourceBergen Signs Long Term Distribution Deal with Walgreens (ABC, WAG)

Pharmaceutical company, AmerisourceBergen Corp. (ABC) signed a long term distribution contract with Walgreen Co. (WAG) on Tuesday.

ABC has reached a long term business agreement with Walgreens and Alliance Boots GmbH, which will help ABC distribute pharmaceuticals to stores and leverage its global supply chain.

ABC has signed a ten year distribution contract with Walgreens and its joint venture, Alliance Boots. Included in the deal is the right for Walgreens and Alliance Boots to purchase about 28% equity in ABC.

This deal is likely to boost EPS growth in the long term. ABC is now expected to see an additional $28 billion in revenue and approximately 20 cents per share in earnings in FY2014. These estimates include costs related to the deal.

For FY2013, the company now estimates EPS in the range of $2.96 to $3.06 per share.

AmerisourceBergen shares were mostly flat during premarket trading Tuesday. The stock has increased 24% in the past year. Walgreens shares were up 73 cents, or 1.72% during premarket trading Tuesday. The stock has increased 24% in the past year.

The Bottom Line
Shares of AmerisourceBergen Corp. (ABC) have a 1.74% yield, based on Monday’s closing price of $48.30.
Shares of Walgreen Company (WAG) have a 2.59% yield, based on Monday’s closing price of $42.43.

AmerisourceBergen Corp. (ABC) and Walgreen Company (WAG) are not recommended at this time, holding DARS™ Ratings of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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