| Item 1.01. | Entry into a Material Definitive Agreement. |
Securities Purchase Agreement and Agreement and Plan of Merger
On September 19, 2022, WBA Acquisition 4, LLC (“Walgreens”), a subsidiary of Walgreens Boots Alliance, Inc. (the “Company”), entered into a Securities Purchase Agreement and Agreement and Plan of Merger (the “Purchase Agreement” and, the transactions contemplated thereby, the “Transaction”), by and among Walgreens, WBA Shields Merger Sub, LLC, a subsidiary of Walgreens (“Merger Sub”), Walgreen Co., a subsidiary of the Company, certain equityholders of WCAS Shields Holdings, LLC (“WCAS Blocker”), WCAS Blocker, Shields Health Solutions Parent, LLC (“Shields”) and WCAS XIII Associates, LLC, solely in its capacity as Sellers’ Representative thereunder.
As of the date hereof, affiliates of the Company directly and indirectly own approximately 70% of the vested outstanding equity interests of Shields and approximately 65% of the equity interests of Shields on a fully-diluted basis. Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, Walgreens will acquire all of the remaining outstanding equity interests of Shields and WCAS Blocker, for a cash purchase price of approximately $1.37 billion, which is based upon the exit multiple agreed at the time of the Company’s 2021 investment in Shields.
The consummation of the Transaction is subject to limited customary closing conditions and is expected to occur during the second quarter of the Company’s fiscal year 2023. The Purchase Agreement also contains customary representations, warranties and covenants.
The Company expects to fund the cash purchase price with cash on hand. The Company will continue to consolidate Shields for purposes of its consolidated financial statements following the consummation of the Transaction.
In connection with the closing of the Transaction, Shields will amend and restate in its entirety the Second Amended and Restated Limited Liability Company Agreement of Shields, dated October 29, 2021, to reflect that Shields will be wholly owned by affiliates of the Company.
The foregoing description of the 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 Purchase Agreement, which is filed as Exhibit 2.1 hereto and incorporated herein by reference. The representations, warranties and covenants in the Purchase Agreement were made solely for the benefit of the parties to the Purchase Agreement for the purpose of allocating contractual risk among 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, Merger Sub, Walgreen Co., Shields, WCAS or any of their respective subsidiaries or affiliates, including the Company.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On September 20, 2022, the Company announced that John Standley, Executive Vice President of the Company and President of Walgreen Co., will leave the Company on November 1, 2022.
In connection with his departure, the Company and Mr. Standley expect to agree on the terms of his separation which will be set forth in a final separation agreement and release (the “Agreement”). The Agreement will require that any separation benefits are subject to Mr. Standley’s execution of the Agreement and compliance with the covenants set forth in the Agreement, including a release of claims. In addition, Mr. Standley will be entitled to other benefits following his separation in accordance with applicable Company plans and programs, including the treatment of his outstanding equity awards under the Walgreens Boots Alliance, Inc. 2021 Omnibus Incentive Plan and the applicable award agreements. Following his departure, Mr. Standley will remain subject to the confidentiality, non-disclosure, non-solicitation, non-competition and non-disparagement obligations set forth in the Agreement and other applicable agreements and policies.
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