Item 1.01. Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On September 17, 2021, Walgreen Co. (“Walgreens”), a subsidiary of Walgreens Boots Alliance Inc. (the “Company”), entered into a Securities Purchase Agreement (the “Securities Purchase Agreement” and, the transactions contemplated thereby, the “Transaction”), by and among Walgreens, certain equityholders of Shields Health Solutions Parent, LLC (“Shields”), certain stockholders of WCAS Shields Holdings, Inc. (“WCAS”), Shields, WCAS and WCAS XIII Associates, LLC, solely in its capacity as Sellers’ Representative thereunder.
Pursuant to the terms and subject to the conditions set forth in the Securities Purchase Agreement, Walgreens will increase its ownership of the outstanding equity interests of Shields, from approximately 23% to up to approximately 71%, for a purchase price of up to approximately $970 million, subject to certain purchase price adjustments and depending on the number of certain existing equityholders of Shields that elect to exercise “tag-along” rights in accordance with the Existing LLCA (as defined below) and therefore sell certain of the equity interests to Walgreens.
The consummation of the Transaction is subject to customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Securities Purchase Agreement also contains customary representations, warranties and covenants.
The Company expects to fund the cash purchase price through a combination of cash on hand and available credit facilities. The Company will consolidate Shields for purposes of its consolidated financial statements following the consummation of the Transaction.
The foregoing description of the Securities Purchase Agreement and the Transaction does not purport to be complete and is qualified in its entirety by reference to the full text of the Securities Purchase Agreement, which is filed as Exhibit 2.1 hereto and incorporated herein by reference. The representations, warranties and covenants in the Securities Purchase Agreement were made solely for the benefit of the parties to the Securities Purchase Agreement for the purpose of allocating contractual risk between those parties, and do not establish these matters as facts. Investors should not rely on the representations, warranties and covenants as characterizations of the actual state of facts or condition of Walgreens, Shields, WCAS or any of their respective subsidiaries or affiliates, including the Company.
Second A&R Limited Liability Company Agreement
In connection with the closing of the Transaction, the Company and its equityholders will amend and restate in its entirety (such amendment and restatement, the “Second A&R LLCA”) the existing Amended and Restated Limited Liability Company Agreement of Shields, dated August 19, 2019 (the “Existing LLCA”). The Second A&R LLCA, among other things, contains certain put and call rights that may be exercised following the consummation of the Transaction pursuant to which Walgreens would acquire up to the remaining approximately 29% of the outstanding equity interests of Shields for a purchase price calculated based on specified multiples of Shields’ annualized prior quarter’s Management Adjusted EBITDA (as defined in the Second A&R LLCA), subject to certain purchase price adjustments. The Company currently expects such purchase price to be between approximately $1 billion and $1.25 billion.
The foregoing description of the Second A&R LLCA does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Second A&R LLCA, which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
