Introductory Note
On January 3, 2023, Village Practice Management Company Holdings, LLC (“VillageMD”), of which a majority of the outstanding equity interests on a fully diluted basis are beneficially owned by Walgreens Boots Alliance, Inc. (the “Company”), completed its previously announced acquisition (the “Summit Health-CityMD Acquisition”) of WP CityMD Topco LLC (“Summit Health-CityMD”). The Summit Health-CityMD Acquisition was completed pursuant to the terms and subject to the conditions of the Agreement and Plan of Merger, dated as of November 7, 2022 (as amended, the “Merger Agreement”), by and among VillageMD, Village Practice Management Company, LLC (“Village Practice Management”) and Project Teton Merger Sub LLC (“Merger Sub”), each a wholly-owned subsidiary of VillageMD, Summit Health-CityMD and Shareholder Representative Services LLC, solely in its capacity as representative and agent of the former equityholders of Summit Health-CityMD. Upon the consummation of the Summit Health-CityMD Acquisition, VillageMD paid $6.9 billion of the aggregate consideration therefor, consisting of $4.85 billion in cash and the remainder in Class E-3 Preferred Units of VillageMD allocated among Summit Health-CityMD equityholders pursuant to individual elections and certain prorationing adjustments, and paid off $1.9 billion in net debt of Summit Health-CityMD. VillageMD will pay an additional $100 million of cash consideration one year following the consummation of the Summit Health-CityMD Acquisition.
On January 3, 2023, in order to fund part of the cash portion of the consideration for the Summit Health-CityMD Acquisition, the Company and VillageMD completed their previously announced transactions contemplated by the Amended and Restated Class E Preferred Unit and Class F Preferred Unit Purchase Agreement, dated as of January 3, 2023 (the “Unit Purchase Agreement”), by and among WBA Acquisition 5, LLC, a subsidiary of the Company (“Walgreens”), Cigna Health & Life Insurance Company and Evernorth Health, Inc., each a subsidiary of Cigna Corporation (“Cigna”), VillageMD, Village Practice Management and, for certain purposes specified therein, the Company and certain other members of VillageMD. Pursuant to the terms and subject to the conditions of the Unit Purchase Agreement, Walgreens acquired Class E-2 Preferred Units and Class F-2 Preferred Units of VillageMD in exchange for $1.97 billion in aggregate consideration and Cigna acquired Class E-1 Preferred Units and Class F-1 Preferred Units of VillageMD in exchange for $2.5 billion in aggregate consideration (the “VillageMD Investments”). Following the Summit Health-CityMD Acquisition and the VillageMD Investments, the Company remains the largest equityholder of VillageMD, with beneficial ownership of approximately 53% of the outstanding equity interests of VillageMD on a fully diluted basis.
In connection with the consummation of the Summit Health-CityMD Acquisition and the VillageMD Investments, VillageMD undertook certain internal restructuring actions to implement a new holding company structure (the “VillageMD Restructuring”). The VillageMD Restructuring resulted in VillageMD, formerly a wholly owned subsidiary of Village Practice Management, becoming the parent entity of Village Practice Management and the former members of Village Practice Management receiving equivalent classes and amounts of securities of VillageMD.
| Item 1.01. | Entry into a Material Definitive Agreement. |
Merger Agreement Amendments
On January 3, 2023, in connection with the consummation of the VillageMD Restructuring, VillageMD entered into a Second Amendment to Agreement and Plan of Merger (the “Second Merger Agreement Amendment”) by and among VillageMD, Village Practice Management, Merger Sub and Summit Health-CityMD. The Second Merger Agreement Amendment amends certain terms of the Merger Agreement, including by adding VillageMD as the purchaser entity party to the Merger Agreement and reflecting various other conforming changes with respect to the VillageMD Restructuring and ministerial updates. Previously, on November 14, 2022, VillageMD entered into a First Amendment to Agreement and Plan of Merger (the “First Merger Agreement Amendment”) by and among Village Practice Management, Merger Sub and Summit Health-CityMD, which similarly amended certain terms of the Merger Agreement to reflect changes with respect to the VillageMD Restructuring and ministerial updates. The First Merger Agreement Amendment is not a material amendment to the Merger Agreement, and is described in this Item 1.01 solely for the sake of completeness.
The foregoing description of the First Merger Agreement Amendment and the Second Merger Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the First Merger Agreement Amendment and the Second Merger Agreement Amendment, which are filed as Exhibit 2.1 and Exhibit 2.2 hereto, respectively, and are incorporated herein by reference. The representations, warranties and covenants in the First Merger Agreement Amendment and the Second Merger Agreement Amendment are qualified
