Boots on the worldwide road as Walgreens buys 45% stake
Boots, one of the best-known names on the British High Street, is on its way to become part of the American drug store chain Walgreens.
Boots: US takeover?
Walgreens is buying a 45 percent stake in Alliance Boots for $6.7 billion. The deal could give it full control of Alliance Boots by 2015 - creating one of the world’s largest pharmacy retailers with 11,000 stores in 12 countries.
The move lets Walgreens expand into overseas markets, and give Alliance Boots a presence in the Unites States that it has long wanted, says the New York Times.
The deal is seen by the Times as the latest "strategic manoeuvre" manoeuvre by Alliance Boots’ executive chairman, Italian billionaire Stefano Pessina, who joined forces with investment firm Kohlberg Kravis Roberts to take over the European pharmacy retailer for $22 billion in 2007.
Through a number of international acquisitions since, he has turned Alliance Boots into a global retailer. In 2006, he played a central role in the $12 billion merger between Boots and a rival, Alliance Unichem. Pessina said the company had been looking for a decade for how to get into the U.S. and started talking to Wasson after he took over a year ago.
Pessina said, “This strategic transaction represents a further vital step in achieving our vision of becoming a global healthcare leader.”
Gregory Wasson, chief executive of Walgreens, said in a statement,“Today’s announcement represents an exciting opportunity to accelerate our five core strategies and advance that mission in the U.S. and now internationally.”
Walgreens is buying Alliance Boots for $4 billion in cash and $2.7 billion in company stock. It has the option to buy the remaining 55 percent stake in Alliance Boots three years after the deal closes for $9.5 billion in cash and stock.
Walgreens is looking for costs savings of up to $150 million in the first year after the deal closes, expected to be by September 1. Savings by the end of 2016 could be $1 billion . But Walgreen shares initially dropped 6% in New York as some investors thought it a pricey deal.