Walgreens Buys Boots

Walgreens is purchasing a 45% stake in European pharmacy retailer Alliance Boots, which has dabbled in the U.S. market since 2004. The deal is expected to close Sept. 1.The $6.7 billion agreement gives Walgreens the option to buy the remaining 55% of its U.K. peer in three years, a transaction that both parties expect to take place.Zug, Switzerland-based Alliance Boots is the largest retail pharmacy chain in Europe. Of the roughly 3,330 health and beauty stores it operates in 11 countries, 3,200 have a pharmacy. In addition, its pharmaceutical wholesale businesses supply medicine, healthcare products and related services from 370 distribution centers in 21 countries. Combined, Walgreens and Alliance Boots will have more than 11,000 retail stores."We are bringing together the strengths and expertise of each company to create a worldwide healthcare platform for the future," Walgreens chief executive officer Greg Wasson said in a media release announcing the deal. "Together we will be ideally positioned to expand our customer offerings in our existing markets and become the health and well-being partner of choice in emerging markets.""The fit is natural," Stefano Pessina, executive chairman of Alliance Boots, said in the release. "The Walgreens consumer profile in the U.S. is similar to Boots in the U.K. in many ways: a trusted and much-loved pharmacy brand with a strong heritage. Our pharmaceutical wholesale businesses will provide logistics know-how to Walgreens and are well-placed to be one of the growth engines of the new enterprise."Boots' health and beauty products — which include products under the No7, Soltan, Botanics, Boots Pharmaceuticals and Boots Laboratories brands — have already made their way into the U.S. market, beginning with a 2004 test at Target. The mass merchant now carries Boots products chainwide.Walgreens' primary competitor, CVS/pharmacy, stocked Boots brands in select stores from 2004 (see "CVS Kicks Up ..." in Related Articles) until approximately February 2010 (according to reports). Canadian chain Shoppers Drug Mart also carries some products.As part of the agreement, Wasson and Walgreens' chief financial officer Wade Miquelon, general counsel Thomas Sabatino and chief strategy officer Robert Zimmerman will join the Alliance Boots board of directors. Joining the Walgreens board will be Pessina and Dominic Murphy, a director and member of global investment firm KKR & Co., which acquired Alliance Boots in 2007.Once the second step of the transaction is undertaken in 2015, the combined company's new name will reflect the heritage of both Walgreens and Alliance Boots, the release said.

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