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Walgreens to complete takeover of Alliance Boots

Creates global leader in pharmacy
walgreens store

The US pharmacy giant Walgreens last week announced it plans to complete the acquisition of Alliance Boots two years after buying a 45 per cent stake in the company.

Chicago-based Walgreens has exercised an option to acquire the remaining 55 per cent of Europe's Alliance Boots to create a 'fully combined company' known as Walgreens Boots Alliance. Alliance Boots will receive £3.13bn ($5.29bn) in cash and 144.3 million shares of common stock of Walgreens.

The new company will remain headquartered in Chicago – a contrast to recent 'tax inversion' deals in healthcare where US firms, such as Mylan and AbbVie, have made deals with European companies to establish a base in a country with a lower rate of corporation tax than in the US.

Instead the motivation for the deal seems to be the potential to cut costs, with Walgreens targeting $1bn in savings by the end of the financial year for 2017.

'The combined size, scale and expertise will help Walgreens and Alliance Boots expand the supply, and address the rising cost, of prescription drugs in America and worldwide,' said the companies in a statement.

Walgreens Boots Alliance will via four separate divisions to retain its key brands. This includes the pharmacy/health chains Walgreen Co in the US and Boots in the UK and Ireland. Boots will retains its headquarters in Nottingham, UK.

The other two divisions that will comprise the new company are pharmaceutical wholesale and international retail, which includes European firm Alliance Healthcare, and global brands.

The merger creates a new global leader in pharmacy with Walgreens Boots Alliance owning more than 11,000 stores in 10 countries. The company will also feature the world's largest pharmaceutical wholesale and distribution network with more than 370 distribution centres delivering to more than 180,000 pharmacies, doctors, health centres and hospitals in 20 countries.

As for leadership, current president and CEO of Walgreens Greg Wasson will become president and CEO of Walgreens Boots Alliance. Stefano Pessina, who is executive chairman of Alliance Boots, will become executive vice chairman responsible for strategy and mergers and acquisitions. He will report to Wasson in this position.

Current Walgreens chairman Jim Skinner will serve as the non-executive chairman of the board of directors for the combined company.

Pessina commented: “Together with Walgreens, we have already made good progress over the past two years and I strongly believe that the merger will bring significant growth opportunities for both mature and emerging markets.”

The transaction is expected to close in the first quarter of 2015.

Article by
Thomas Meek

12th August 2014

From: Sales, Healthcare



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