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.
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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