Good day, and welcome to the AmerisourceBergen Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Bennett Murphy, Head of Investor Relations.
Please go ahead.
Thank you. Good morning and thank you all for joining us for this conference call to discuss the strategic agreements between AmerisourceBergen and Walgreens Boots Alliance. I'm Ben Murphy, Senior Vice President, Investor Relations. Joining me today are Steve Collins, Chairman, President and CEO and Jim Cleary, Executive Vice President and CFO. Today's discussion will refer to a slide presentation, which can be found on our investor website at investors.
Americisourcebergen.com. During this conference call, we will make forward looking statements about our business prospects and financial expectations on an adjusted non GAAP basis, including, but not limited to, EPS and operating income. Forward looking statements are based on management's current expectations and subject to uncertainty and change. For a discussion of key risks and assumptions, we refer you to today's press release and our SEC filings, including our most recent Form 10 ks. These are available on our investor website.
AmerisourceBergen assumes no obligation to update any forward looking statements, and this call cannot be rebroadcast without the the expressed permission of the company. You will have an opportunity to ask questions after today's remarks by management. We ask that you limit your questions to 1 per participant in order to get to as many participants as possible within the hour. With that, I'll turn the call over to Steve.
Thank you, Kenneth. Good morning, everyone, and a Happy New Year. I hope you enjoyed the holiday season and were able to spend some time at least virtually with your families. The beginning of a new year invites reflections for the past. For AmerisourceBergen, this past year has meant demonstrating the vital nature of our role in the health system and a key pillar of pharmaceutical innovation and access.
With our customer and pharmaceutical centric strategy, innovative mindset and consistent ability to execute, we have proven ourselves to be a strategic asset to our healthcare provider customers, global manufacturer partners and government stakeholders. Our financial and strategic position is enabling our next evolution, which will help enhance our ability to provide healthcare capabilities across regions and deliver innovative solutions for our upstream and downstream partners. As we announced earlier today, we have entered into 2 strategic agreements with Walgreens Boots Alliance. The acquisition of the majority of Walgreens Alliance Healthcare's business for $6,500,000,000 in cash and stock, as well as the extension and expansion of the existing U. S.
Strategic partnership between AmerisourceBergen and Walgreens through 2029. As highlighted on Slide 4, by acquiring Alliance Healthcare, AmerisourceBergen adds to the breadth and depth of services and capabilities we offer, building on and extending our core distribution expertise with an established leader in Europe and enhancing our global platform of manufacturer services to support pharmaceutical innovation. In addition, by extending and expanding our strategic U. S. Partnership with Walgreens, we'll be able to achieve incremental growth, efficiency and scale for our U.
S. Network, providing further value for all our downstream customers and creating opportunities for further global collaboration. There are clear financial and strategic benefits to today's agreements, which are summarized on Slide 5. 1st, the addition of Alliance Healthcare's business will enhance our scale and margin profile and is expected to deliver high teens percent adjusted EPS accretion in the 1st fiscal year. 2nd, we will leverage Alliance Healthcare's market leadership to extend our core wholesale distribution and related solutions capabilities into markets across United Kingdom, Europe and North Africa.
3rd, Alliance Healthcare's manufacturer services businesses will strengthen our global platform of higher margin manufacturer services to support innovation, further positioning AmerisourceBergen as a partner of choice. 4th, the extension and expansion of our existing Walgreens partnership in the U. S. Through 2029 creates incremental growth and efficiency in sourcing, logistics and distribution. Turning to slide 6, which provides an overview of Alliance Healthcare's businesses.
Just as AmerisourceBergen is a key pillar of pharmaceutical innovation and access in the U. S. And Canada, Alliance Healthcare is a market leader. Through its flagship brand, Alliance Healthcare is one of the largest wholesalers in Europe and supplies more than 115,000 pharmacies, doctors and health centers in 13 countries. To supplement its core distribution business, Alliance Healthcare's Aloga, Alcira and Steel's businesses provide a range of manufacturer services and solutions which are complementary to how MarisourceBergen offers a comprehensive suite of global commercialization services under brands such as World Courier, ITS, NMR, Pro Pharma, Exceda and Lash Group.
Furthermore, Alliance Healthcare offers private label solutions in Europe, similar to those of AmerisourceBergen in the United States. Finally, just as AmerisourceBergen benefits from the key relationship it has with members of its creative Good Neighbor Pharmacy network of independent pharmacies in the U. S, Alliance HealthCare's Alfaiga network provides an independent pharmacy footprint of 7,000 members across 10 countries. As outlined on Slide 7, the complementary nature of Alliance Healthcare to many of AmerisourceBergen's businesses enhances our ability to provide greater breadth of product offerings and services to customers and positions AmerisourceBergen to be a partner of choice for manufacturers and customers. AmerisourceBergen has the best customer base with a balanced portfolio of key anchor customers across all our segments.
With a diverse and extensive group of customers, AmerisourceBergen is well positioned to support patient access wherever a prescription is needed. Likewise, Alliance Health has built strong relationships with its customers and partners by demonstrating an understanding of market dynamics and providing critical solutions to address market specific challenges. Importantly, Alliance Healthcare UK will remain the distribution partner of Boots until 2,031, strengthening our portfolio of key anchor customers as we support patient access in new geographies. AmerisourceBergen also has an innovation mindset. We embrace advanced technologies, enabling us to provide data driven solutions to new and existing challenges.
With its Aloga and Altura Businesses, Alliance Healthcare will augment our manufacturer services offerings with additional capabilities and an expanded presence in international markets. Through Reliance Healthcare's local expertise, we will bolster our offerings to upstream and downstream customers and get our respective customers with great and serve our respective customers with greater speed, efficiency and data capabilities. As illustrated in Slide 8, combining our market leadership, including our leading positions in specialty distribution and solutions with Alliance Healthcare's local market leadership across Europe enhances our position as a market leader that supports pharmaceutical innovation globally. Now more than ever, there's a heightened awareness of the value of the pharmaceutical supply chain and in the ability to support global pharmaceutical innovation through a footprint with broad leadership and local expertise. By adding to the breadth and depth of valued services offerings to our manufacturer partners and to our customers, we will be better positioned to meet the increasingly global nature of the pharmaceutical supply chain.
This means incremental financial growth opportunities, which Jim will be happy to describe. Now I will turn the call over to Jim discuss the financial details of the agreement, including expected financial benefits and to provide updates to our fiscal 2021 guidance.
Jim? Thanks, Steve, and good morning, everyone. Please turn to Slide 9 and note that my remarks today will address adjusted non GAAP measures. As reported this morning, AmerisourceBergen has entered into a definitive agreement to acquire Alliance Healthcare from Walgreens for a total consideration of approximately $6,500,000,000 including 6.275 $1,000,000,000 in cash and 2,000,000 shares of AmerisourceBergen stock. Approximately half of this consideration is expected to be funded by cash on hand.
Upon closing the acquisition, we a period of deleveraging to ensure AmerisourceBergen maintains its strong investment grade credit ratings. As Steve discussed, the addition of Alliance Healthcare will allow us to expand our reach, providing significant benefits to our manufacturer partners and expanding our customer base. Alliance will extend AmerisourceBergen's core wholesale distribution and related solutions capabilities into key markets including the United Kingdom, France, Spain, Norway, Turkey and others. Walgreens Boots Alliance operations in China, Italy and Germany are not part of this transaction. Over the years, the Alliance team has built strong distribution and manufacturer service relationships and provides a suite of value added services and solutions.
We feel confident that these businesses and capabilities build upon AmerisourceBergen's key differentiators of having key anchor customer relationships and innovative services and solutions. In addition to expanding our distribution footprint and solutions, this acquisition will add to our solid growth platform as we gain access to new markets with scale and profitability. In the 1st year following the close of this transaction, we anticipate adjusted EPS percent accretion in the high teens. By the 4th year following the close of the acquisition, we expect to ramp up to annual run rate synergies of $75,000,000 Adjusted EPS accretion accelerates as synergy value from the acquisition is captured and as expanded U. S.
Distribution relationship financial benefits ramp. As always, AmerisourceBergen will approach integration in a thoughtful and strategic manner. Financial stewardship is one of AmerisourceBergen's fundamental pillars. We remain committed to maintaining our strong investment grade credit ratings. We are also committed to cash flow generation to support our strategic and financial position.
We expect the acquisition of Alliance Healthcare to increase adjusted free cash flows to 125 percent of AmerisourceBergen standalone estimates. This positive contribution to cash generation will support our debt reduction efforts in the years following the close of the transaction. We anticipate closing the acquisition by the end of our 2021 fiscal year subject to customary regulatory approval. Turning to Slide 10, it is important to note that while we are expanding our global footprint, we remain committed to and extremely well positioned in the U. S.
Market. Today's extension and expansion of the strategic partnership in the U. S. Between AmerisourceBergen and Walgreens through 2029 built on the successful long term relationship we have shared. This expanded partnership creates incremental growth and efficiency opportunities and enables each of our enterprises to better serve our respective customers.
Joint teams from both our companies have already identified opportunities for growth and efficiency through expanding our sourcing, logistics and distribution collaboration. As we continue to realize the increased efficiencies derived from this partnership, we will be able to further provide differentiated value for all of Amerisource Bergen's customers. AmerisourceBergen and our partner Walgreens expect the expansion of our U. S. Strategic partnership to provide incremental financial benefits ramping up to annual run rate synergies in the 4th year of at least $150,000,000 which will be shared equally between the 2 companies.
This morning, we also announced updated guidance for fiscal 2021. Our business has continued its strong momentum in the Q1, benefiting from continued strong operating income performance, and we now expect adjusted diluted earnings per share to be in the range of $8.25 to $8.50 up from the previous range of $8.20 to $8.45 This updated financial guidance does not include any contribution from the proposed Alliance Healthcare acquisition or any incremental growth from the expanded U. S. Partnership. We will provide additional details on our financial performance and updated guidance on our Q1 fiscal 2021 earnings call, which will take place on February 4.
In closing, the addition of Alliance Healthcare will build on our pharmaceutical centric strategy and expand our reach, benefiting our manufacturer partners, customers and the patients they serve. The acquisition will provide significant earnings accretion and attractive growth opportunities, while our expanded strategic partnership with Walgreens will drive additional benefits for both Walgreens and our other customers. I look forward to working closely with the Alliance Healthcare team to jointly deliver on our purpose of being united in our responsibility to create healthier futures. Now I will turn the call back over to Steve for some final remarks. Steve?
Thank you, Jim. We will conclude today's remarks on Slide 11, which I will reinforce some of the key themes that we've been talking about today. AmerisourceBergen's strength lies in the breadth and depth of our offerings across the pharmaceutical value chain. Today's announcement strengthens our relationship with our largest partner, while adding scanning efficiency that will enable us to advance our role as a key pillar of pharmaceutical innovation and access globally. Our enhanced scale, expanded wholesale and distribution footprint and stronger global manufacturing services platform will open up significant opportunities for growth as we leverage out diversified capabilities in new markets to expand relationships with customers.
By combining the capabilities, expertise and deep understanding of our organization, we'll be able to enhance our leadership position across all our markets and capture incremental financial value for our shareholders. I'm excited to continue our work with Walgreens and welcome very much with open arms and very open candor and position as to your capabilities and your ability to join AmerisourceBergen. Burden, we welcome the Alliance Healthcare people who are going to help us fulfill our purpose of being united in our responsibility to create healthier futures. This concludes our prepared remarks for today. Now I'll turn the call over to our operator.
Thank you. Please begin the Q and A session.
Thank you. We will now begin the question and answer The first question today comes from Eric Percher of Nephron Research. Please go ahead.
Thank you. I appreciate the opportunity to ask a question. So I'd like to hear some of your perspectives on the 13 countries. We know that there's a lot of variance across countries, especially over the past year. And so your perspectives on stability and growth opportunities across the 13 and then also the kind of rationale for not including Germany alongside these?
Yes. Hi, Erica. Thank you for the question. First of all, let's just start with the U. K, which is a very mature business, Very much analogous to our Walgreens relationship is the Boots relationship and it's perhaps even more evolved in terms of the services that we provide.
And that is a terrific business and we've gotten to know the management team well there and couldn't be more excited about the opportunities in that market and getting to understand areas like Brexit etcetera. So it's a very evolved service model and it's also a buy and sell market like us. The rest of the countries are European markets are more regulated with certainly set margins on contracts. For example, most recently in France, there was a change in the fee for service based on the pandemic. So there's lots of different market issues.
We also have exciting areas like Turkey and a high growth market in Egypt where we have a fifty-fifty partnership. So there's lots to learn and we've gotten to be very pleased about it. The point I'd leave you with is that we're acquiring a diverse portfolio of business. All who have market leading positions in their respective geographies and excluded geographies that have unique structural differences. And that's the key point when you talk about Germany and China and Italy are already the significant businesses of WBA and their partners that are excluded.
So thanks. Next question please.
The next question comes from Eric Coldwell of Baird. Please go ahead.
I guess guys named Eric have the same questions on why to exclude a couple of these countries. But my second question in the list was about the incremental synergies that you mentioned in the U. S. The Walgreens has owned this business obviously for a long time. You've been in partnership with Walgreens for a long time.
I'm curious where maybe more specifically you expect to find some of these synergies on the extended and expanded U. S. Relationship. If you could give us some details around those opportunities would be great.
Sure. I'll talk a little bit about that, Eric. And our teams have worked together really closely to identify new incremental opportunities and assortment, leveraging scale. And there are things that will benefit ourselves and Walgreens and also things that we'll be able to benefit other AmerisourceBergen customers also. And so we'll be targeting areas like transportation, private label products and other product store items.
Next question please.
The next question comes from Steven Valiquette of Barclays. Please go ahead.
Thanks. Good morning and congrats on the transaction. So one of the questions that always comes up in relation to these types of deals is really just around the timing and sort of the why now. And I guess in this case, ABC is dealing with opioid litigation settlement, which has balance sheet implications. Walgreens is going through management transition.
Can you just talk more about why this deal makes sense for right here, right now? Thanks.
Okay. Hi, Steve. I think it's a fair question. I really appreciate you answering this. But ABC believes we are pursuing this acquisition from a position of strength and this is something that has been contemplated by the way for a very long time.
In fact, in 2013, we originally started talking about it when
we did the deal. And we really feel the time is right for us
to make this global expansion. And let me tell you the reason. Both our business and the lines business have been resilient through COVID and will continue to play a critical role in the pharma supply chain. And in fact, the opportunities for us to play a critical role and the awareness of what wholesale does has only been enhanced during this pandemic. We have consistently at ABC maintained low leverage and currently have a net cash position, which gives us financial flexibility to absorb the acquisition and a potential settlement.
As you will note, we are paying over half of this transaction in cash. Our strong and consistent cash flow generation gives us the wherewithal to rapidly reduce leverage following the acquisition. So that is clearly part of our plan and both businesses are cash flow positive. Jim, you wanted to add something?
Yes, sure. You the potential opioid settlement. And as you know, in the Q4, we accrued for the potential global settlement given the significant progress made on discussions with the parties involved leading us to believe that a settlement was estimable and probable. And we will continue to be very careful stewards of our cash and capital to ensure we fulfill obligations. Thanks.
Next question please.
The next question comes from Jalendra Singh of Credit Suisse. Please go ahead.
Thanks and congrats on the deal. Deal. Just following up on Erik's question earlier about European markets. So when we think about the markets, obviously, European market is more fragmented compared to the U. S.
Market. And our understanding is that it should allow wholesalers to extract better prices. Are you capturing any of that benefiting your expectations on synergies and accretion? Just curious about your thoughts on that.
Yes. And you're talking specifically to synergies capture the acquisition piece?
Yes. Yes. And so as we talked about on the call, we indicated that we anticipate adjusted EPS percent accretion in the high teens in the 1st year following the close of the transactions. And then the synergies, the net synergies really don't impact that accretion in the 1st year and they ramp up over time the synergies from the acquisition to a run rate of $75,000,000 in the 4th year. And there's really a number of ways that we get to that.
There's a lot of opportunities for Alliance's value added services businesses. And they are, as we talked about in our prepared remarks, a very important part of Alliance is these value added service businesses. And there's opportunities for them to collaborate with our global commercialization services and animal health businesses. There's opportunities for them to collaborate with our Good Neighbor Pharmacy and offerings to pharmacies and there's opportunities for them to collaborate with our sourcing operations also. We would also see potential opportunities over time in manufacturer services, data services and global shared services.
So those are some of the areas that give us confidence to be able to ramp up to the synergies number of $75,000,000 in the 4th year. But once again, those net synergies are not relied upon to for the accretion percentage number in the 1st year post close.
Next question please. The next question comes from
Robert Jones of Goldman Sachs. Please go ahead.
Great. Long time to speak and remind me never to play poker with you guys. I guess the two questions I had were just around the strategic rationale, which we touched on a bit, but it seems like and not to oversimplify, you're getting the wholesale business obviously in the markets you mentioned, but then you're getting a few of these leading manufacturer services assets.
To me,
it seems like the more attractive side of that and correct me if you see it differently or maybe you get more upside optionality would be on the manufacturer servicing side. So any chance you could kind of break down within the business you're getting, how much of it is on the services side versus the distribution side? And then maybe even just to put it in the context of that $75,000,000 of synergies, any sense you can give us on which side of the house those synergies are expected to come from?
Bob, it's funny you sound like you're in the U. S. Talking to us about trying to split out specialty and core wholesale business and now we're going to
have you trying to split out
the services and distribution businesses. I'll let Jim get into details, but two points I wanted to make. The first is into your question and the second is to an earlier question. We these businesses are very specific to each country and each circumstance. So in some of them particularly in the U.
K. The service model is very involved. In some, there's a lot of opportunities post COVID to develop the logistics and the Logotop business. So we look at each market as having the capabilities of the core wholesale distribution and then in some stage of evolution on the services model and an opportunity to grow them and also to do that in ways that ABC is more familiar with. A good example is how different is oncology is in different markets or how different health systems are serviced in different markets.
So those will all be determinants and that
would help us explain it. I'm going to
let Jim hand over the synergies, but a point I wanted to make early about to the question about why haven't we done some of the what we have called Project 4 that's looking at operational and foundational and e commerce benefits in the U. S. The reason we're doing that now is because the business is where it is. If you look at what's happened with e commerce and if you look at what's happened with product selection and retail, it's very important for a lot of our customers to get into these products and that's why the time is right for us to offer these new services and to do that in partnership with our largest customer Walgreens. Jim, please go ahead.
Yes. Bob, that's a really good question because of course these value added services businesses are a very important part of the alliance and a very important part of the strategic rationale for the acquisition. And as you know, at AmerisourceBergen, the global commercialization services and animal health Group represents about 20% of our adjusted operating income. And within Alliance, these value added services businesses represent a significantly higher percent of their adjusted operating income. And we aren't breaking out that percent at this time, but it's a significantly bigger part of their adjusted operating income than global commercialization service and Animal Health as a percentage of AmerisourceBergen.
So that was a really nice thing when we got into this acquisition and got into really learning the business and meeting the people. And we've been looking at commercialization services businesses in the United States and it's certainly a place where we'd like to grow and expand our business. So as we really got into Alliance and understood it more, very attractive part of the business are these value added services businesses, which really enhance operating margin. And so it's a part of the business we really like. And I talked about synergy a little bit on the last question, but we just do see very nice opportunities for these alliance businesses to collaborate the value added services businesses to collaborate with our global commercialization services and animal health businesses, but also to collaborate with our Good Neighbor Pharmacy business and also with our sourcing operations.
The next question comes from Glenn Santangelo of Guggenheim. Please go ahead.
Yes. Thanks for taking my question. Hey, Steve, maybe I just wanted to take a step back and ask a bigger picture question on Europe in general. As you know, it's been a place for a lot of companies to do business and I appreciate that more of the challenges have been on the retail side of the business. Could you maybe give us your perspective on the pharma distribution business over there, the competitive landscape of their sort of big 3 versus the big 3 over here and maybe how the reimbursement cuts have impacted the retail pharmacies over there and maybe why you feel like the distribution business is going to be insulated from that pressure down the road?
Thanks.
Yes. First of all,
let me start by saying how well Alliance Healthcare reported as a segment within WBA. So we've seen their results and they've been very resilient performance. And we've also seen in the slides their market position in various markets. So let's just talk about some of the learnings we've had from Europe and it's been a fascinating learning experience and getting to know the people and businesses and offerings of Alliance Health Care. So in each market, the mix is very important.
And each market mix leads to market efficiencies, operational efficiencies and a high degree of service variability. So what we want you to take away from this because we could overwhelm you with detail is how the market has a high mix of both distribution and services. And the services businesses have truly, truly embraced us. And we believe that there is more opportunity to do even more. And some of the learnings from ADC will be applied to Europe
and vice versa. And that's really where a lot
of the synergies will come from. The ability for like minded people that are facing similar challenges to get together in a room and try to look at how do you approach a market with common learnings I think is going to be very important. The U. K. Business anchored by Boots is very analogous to us.
And we're not coming in here with this thesis that we're going to change the way the markets are. A lot of wholesale is just servicing independent pharmacies. AmerisourceBergen has more expertise than other classes of trade. We've always said that that's the big differentiator in the U. S.
But we believe we're inheriting a fantastic management team that's very experienced and very tenured. And we're buying this business intact. I mean, we're buying this business
without having our
own country manager for France, etcetera. So, of course, we're going to be very reliant on the Alliance Health Care team and their experience in the marketplace, and we're looking forward to meeting them. Moreover, we have the long term relationship with Walgreens including their 30% shareholding and also a long term relationship which should not be underestimated between the senior people at Walgreens and myself and then people like Jim and Paul Mausch. And also we've known the line's management team for many, many years have collaborated with them in areas like WBAD. So we feel like we've had a lot of exposure.
This is not something that is not being we've been contemplating this for many, many years. So I hope that gives all of you a lot of confidence in this transaction and what AmerisourceBergen's long term objectives are, yes. Next question please.
Next question comes from Rishi Goldwasser of Morgan Stanley. Please go ahead. Yes. Hi, good morning.
Happy New Year and congrats on the acquisition. My question is focused on opportunities for capital deployment. It seems that the free cash flow generation in ramping up cash flow to about 125% of standalone is another important aspect of this deal. So how quickly do you think that you're going to have the capacity for additional capital deployment, specifically buybacks? And then Steve, you mentioned Walgreens 30% holding of Amerisource shares.
How do you think about this long term stake within that context of potentially buying back some fee shares?
Yes. Let me start out with addressing your free cash flow comments and questions. That is one of the things that we like about this business also is that like AmerisourceBergen, it's a very good free cash flow business. And as we said in our prepared remarks, we expect that free cash flow after the acquisition closes to be approximately 125% of AmerisourceBergen standalone free cash flow. Also, we're funding this acquisition, about 50% of the consideration is in cash.
Now as we said in the prepared remarks, we will commence a period of deleveraging after the acquisition closes, Maintaining our strong investment grade credit ratings is very important to us and will continue to be very careful stewards of our cash and capital to make sure that we fulfill all our obligations. And as we look over the long term, as we get kind of longer term, our capital deployment priorities remain the same. I'm always investing in the business, which AmerisourceBergen has always done and has good returns. Looking at M and A longer term, looking at share repurchases and maintaining the dividend. And but as I said, once the acquisition closes, we will commence a period of de leveraging and very important to us to maintain our strong investment grade credit ratings.
Next question comes from George Hill of Deutsche Bank. Please go ahead.
Yes. Good afternoon. And Bob kind of jumped the gun on my question on the breakdown of the earnings inside the business that you're buying. I guess I'm just wondering, can you guys back up a little and give us the financial profile at a high level from an operating earnings and a revenue perspective of what you're purchasing, given that Italy, Germany and China are not included? I guess, I'm assuming it's just under $20,000,000,000 in revenue and call it maybe $900,000,000 in adjusted OP.
I just we can back into the math or the guidance. I just want to make sure that we understand the profile of the assets together.
Yes. And so
the just to kind
of give you some high level metrics there. Yes, in round numbers the business is approximately $20,000,000,000 revenue business. And as we look at adjusted EBITDA, the purchase price is approximately 11x estimated fiscal year 2021 adjusted EBITDA. And of course, by the time the deal closes, that will be close to a trailing multiple and we'll be looking forward to fiscal year 2022.
The next question comes from Elizabeth Anderson of Evercore. Please go ahead. Hi, guys. Congrats on the transaction this morning. Can you talk about how this, if at all, would change the WBAD structure and any kind of changes in either operations or from a synergy perspective?
Thanks.
Thanks, Elizabeth. So we in conjunction with the distribution contract, we expanded WBAD through 2029. We're happy with the performance of WBAD. We believe it's a key differentiator for ABC. And if anything, I think it gives us a new chance reinvigorate the model.
We've had senior management of ABC, myself included, will post pandemic be spending a lot more time in Europe. We've been talking to Onella's team who runs that quite frequently as we look at the parameters for renewing the contract. So yes, we're very positive about WBAD and how it will position the company on both the lines of AmerisourceBergen and presumably for WBA as well. Thank you. Okay.
One more question, please. Our last question.
The next question comes from Eugene Kim of Wolfe Research. Please go ahead.
Good morning, Dan. Thank you for squeezing me in here. I guess a quick follow-up to Eric's questions earlier. Just based on your press release, I believe Walgreens is projecting '21 earnings of mid single digit percent growth for the asset you acquired, but obviously you likely had some COVID impact there. So can you provide some color on how you're thinking about longer term earnings growth trajectory for the business compared to that mid single digit percent growth that Walgreens projecting for this year?
Thank you.
Yes. And so as we look at the business, one of the things about it is it's a good mix of developed and developing countries and so that can enhance the growth rate. The most significant part of the business is in the U. K. And some of the businesses, the service businesses with the higher margins, we look forward to
them as some good
growth opportunities. And I think I'll go back to the comments we made earlier that we expect the adjusted EPS percent accretion to be in the high teens in the 1st year following the acquisition close. And then we expect the financial benefits to ramp in future years as we realize the synergies from the acquisition and importantly also from the expanded relationship in the U. S? Thanks.
Thank you everyone for your attention today. And let me just, first of all, thank the AmerisourceBergen Associates that have created the financial and operational and market conditions to get us to the point we're at today. And again, let me say how excited we are to welcome the Alliance Health team to AmerisourceBergen. So again, let me just say that AmerisourceBergen is entering into this transaction from a position of strength, strength that has come from years of consistent performance, from knowledge of how to be great financial stewards and how to service our customers and how to innovate effectively. We believe that this acquisition will allow AmerisourceBergen to continue to deliver on our purpose of being united in our responsibility to create healthier futures and to do that in a more global way.
Thank you very much. Bye.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.