UPDATE 1-AmerisourceBergen signs 10-year distribution deal with Walgreen
March 19 (Reuters) - Drug distributor AmerisourceBergen signed a 10-year distribution contract with Walgreen Co and associate Alliance Boots GmbH that will also allow them to acquire up to 23 percent of AmerisourceBergen.
AmerisourceBergen said the deal, effective Sept. 1, was expected to contribute an incremental $28 billion in revenue and about 20 cents in earnings per share in fiscal 2014.
The contract will include the distribution of branded, generic and specialty drugs to Walgreen's retail stores, mail order and specialty pharmacies and will give AmerisourceBergen a bigger global reach through Alliance Boots.
"The new agreements are expected to be meaningfully accretive to AmerisourceBergen's earnings and strengthen its confidence in delivering solid and sustainable long-term EPS growth," the company said in a statement on Tuesday.
AmerisourceBergen said it now expected earnings of $2.96 to $3.06 per share from continuing operations in fiscal 2013 ending September, down from its previous forecast of $3.06 to $3.16.
The company said it expects incremental brand revenue of at least $2 billion in September and raised its revenue growth forecast to 8-11 percent for the fiscal year. It had previously forecast revenue growth of 6-9 percent.
AmerisourceBergen said it expects free cash flow for fiscal 2013 to decrease to $100-$200 million as it takes on the new business. The company previously expected cash flow of $750 million to $850 million.
Separately, Walgreen Co reported better-than-expected second-quarter earnings, helped by improved gross margins primarily due to an increase in sales of generic prescription drugs.