: AmerisourceBergen’s stock tanks after largest investor sells $900 million worth of shares

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Shares of AmerisourceBergen Corp. suffered the biggest selloff in more than two years on Thursday, after the drug products and distribution company’s largest investor sold off a chunk of its stake.

The stock
ABC,
-7.93%

dropped 7.7% in morning trading, enough to make it the biggest decliner among S&P 500 index
SPX,
+0.71%

components. The stock, which has now corrected 10.2% since closing at a record $165.73 on April 20, was in danger of the biggest one-day percentage decline since it sank 8.3% on March 23, 2020.

Walgreens Boots Alliance Inc.
WBA,
-0.18%

said late Wednesday that it sold 6.0 million AmerisourceBergen shares at $150 a share, which valued the shares sold at $900 million. The sale price represented a 7.0% discount to Wednesday’s closing price of $161.30. Walgreens’ stock fell 1.0% in Thursday morning trading.

After the sale, Walgreens remained AmerisourceBergen’s largest shareholder, as it still held 25.2% of the shares outstanding.

Walgreens said it plans to use the proceeds from the stock sale primarily to pay down debt, adding that the sale had no impact on the “long-term partnership” between the two companies.

“Walgreens Boots Alliance and AmerisourceBergen will continue our very productive collaboration, creating significant value for both companies,” said Walgreens Chief Executive Rosalind Brewer. “We’ve taken the opportunity to monetize holdings at this time to realize a strong return on our investment, while complementing our other actions to optimize our capital allocation.”

AmerisourceBergen followed that announcement by saying early Thursday that it was “resuming share repurchases with excess free cash flow,” in accordance with its “disciplined” approach to capital allocation.

The company disclosed earlier this month that it had spent $11.4 million to repurchase 79,000 shares during the six months ended March 31, 2022. That left the company with $462 million available in the $500 million stock repurchase program that was launched in May 2020.

The stock has rallied 12.0% year to date, while the SPDR Health Care Select Sector exchange-traded fund
XLV,
+0.34%

has declined 10.4% and the S&P 500 has shed 17.3%.

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