Walgreens buys 45 per cent stake in Alliance Boots

Jun 19, 2012

Strategic partnership will form one of the world's biggest healthcare retailers.

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WALGREEN and Company, the largest chemist chain in the United States, is to pay $6.7 billion in cash and stock to buy a stake in UK health and beauty retailer Alliance Boots in the first international venture for the American company.
Initially, Walgreens plans to spend about $4 billion in cash and contribute more than 83 million shares for a 45 per cent ownership stake in Switzerland-based Alliance Boots, which runs more than 3,300 health and beauty retail stores in 11 countries and has had a presence on the high streets of Britain since 1839, reports Bloomberg.
Walgreens has an option to buy the rest of the company in about three years in a deal valued at around $9.5 billion based on Walgreens' share price and the current exchange rate. The stake is being acquired from KKR & Co and Alliance Boots Chairman Stefano Pessina, who jointly own the UK’s largest chemist chain.
"This is potentially one of the most important moves in European retail history," said Bryan Roberts, director at Kantar Retail in London. "Walgreens is still a US business so its desire to achieve a more global footprint will be a game-changer. This gets them into Europe and Asia."
The acquisition comes while Walgreens works through a sales slump prompted largely by a split with pharmacy benefits manager Express Scripts Holding Co, says The New York Times. Walgreens has seen sales fall for several months since it stopped filling prescriptions for Express Scripts, the largest pharmacy manager in the US, at the end of last year.
Combining Walgreens and Boots would create a global leader with more than 11,000 stores in 12 countries and 370 distribution centres delivering to 170,000 pharmacies, doctors and hospitals, The Daily Telegraph says. The company would also be the world's largest purchaser of prescription drugs.
Walgreens expects the purchase of its initial stake in Alliance Boots to be completed by September. Alliance Boots also runs a pharmaceutical wholesale business that supplies pharmacies, doctors and other healthcare providers in 21 countries.

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