Subsequent events

6 Months Ended

Feb. 28, 2025

Subsequent Events [Abstract]

Subsequent events

Subsequent events

Plan of Merger

On March 6, 2025, the Company entered into the Merger Agreement with Parent, Merger Sub, and certain other affiliates of Parent (collectively with Parent and Merger Sub, the “Parent Entities”). Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving as a wholly owned subsidiary of Parent. At the effective time of the Merger (the “Effective Time”), each share of the Company’s common stock, except treasury stock, shares held by Parent or its affiliates and shares as to which appraisal rights have been properly exercised, will convert into the right to receive $11.45 in cash without interest, and one Divested Asset Proceed Right (“DAP Right”). Each DAP Right will entitle its holder to receive 70% of the net proceeds from any monetization of the Company’s equity or debt interests in Village Practice Management Company Holdings, LLC and its subsidiaries, up to $3.00 per DAP Right, subject to the terms and conditions of the Divested Asset Proceed Rights Agreement. The Merger Agreement includes a 35-day “go-shop” period from March 6 to April 10, 2025, allowing the Company to solicit alternative acquisition proposals.

The parties intend to complete certain pre-closing transactions at an initial closing that will take place on the business day immediately prior to the closing (the “Initial Closing”). The Initial Closing is conditioned on certain conditions, including (i) the adoption of the Merger Agreement by (a) the holders of a majority of the outstanding common stock of the Company and (b) the holders of a majority of the outstanding shares of the Company’s common stock cast by the unaffiliated Company stockholders at the special meeting of the Company’s stockholders, (ii) certain regulatory approvals and filings (including the expiration of any waiting periods in respect thereof), and (iii) other customary conditions. Stefano Pessina, Executive Chairman, who controls approximately 17% of the Company’s common stock, has agreed to vote in favor of the adoption of the Merger Agreement, subject to the terms and conditions of the Voting Agreement, and reinvest his proceeds from the Merger plus an additional cash investment into certain entities to be formed by affiliates of Parent in connection with the Merger. The closing of the Merger (the “Merger Closing”) will occur on the business day immediately following the Initial Closing, currently expected in the fourth quarter of calendar year 2025.

The Merger Agreement contains certain customary termination rights, including if the Merger is not completed by March 6, 2026 (extendable to June 6, 2026 and further under certain conditions) and by mutual written consent, among others. Upon termination of the Merger Agreement under specified circumstances, the Parent Entities will be required to pay the Company a termination fee equal to $560 million. Upon termination of the Merger Agreement under specified circumstances, the Company may be required to pay Parent (or one or more of its designees) a termination fee of either $158 million or $316 million or the documented out-of-pocket expenses of the Parent Parties and their affiliates, up to a maximum amount of $30 million. The Company also expects to incur significant costs for professional services and other transaction-related expenses in connection with the Merger, though the exact amount of these expenses cannot be quantified at this point.

VPF settlement

In March 2025, the Company settled VPF derivative contracts through the delivery of an aggregate 2.2 million shares of Cencora common stock to financial institutions. As part of the settlement, the Company received cash proceeds of $103 million and recognized a gain of $378 million within Other income (expense), net.