US retailer Walgreens seized control of UK high street chemist Boots yesterday in a £9 billion cash and shares deal.
The move saw the American group swallow up the 55% shareholding in the chemist’s parent company Alliance Boots that it did not already own.
The new group, Walgreen Boots Alliance, will be based in Chicago but the headquarters of Boots will remain UK-based.
However, the new owner signalled that major change was on the way after immediately posting a $1bn cost-saving target by 2017.
Alliance Boots employs more than 108,000 staff in more than 25 countries, including 70,000 in the UK where Boots its a high street staple with nearly 2,500 stores.
Walgreens bought a 45% stake in Alliance Boots for £4bn in 2012, with the option to buy the rest by August of next year.
But the company will now take up its option by February in exchange for just over £3bn in cash plus 144.3 million shares, worth just under £6bn.
The transaction will reportedly net a £1.5bn windfall for executive chairman Stefano Pessina, who took Alliance Boots private, with private equity firm KKR, in an £11.1bn deal in 2007.
Chief executive Greg Wasson said the move represented a “pivotal moment” in Walgreens history as it progressed towards its target of raising revenues to between £75bn and £77bn by 2016.
Mr Wasson said: “As we launch our global plan, we are more focused than ever on what it will take to compete and succeed on the world stage. We are uniquely positioned to be a leader and a champion for accessible, affordable healthcare, and that means continuing to innovate, to find new ways to be as efficient as possible, and more agile and nimble as we compete in the worldwide market.”
Mr Pessina, who will become executive vice-chairman of the new group, said: “The expected creation of the new enterprise will represent the most significant milestone in the history of Alliance Boots and, importantly, a very positive step for the healthcare industry as a whole.”
Walgreens said it had rejected the option of moving its corporate headquarters from the US to the UK a move that would have reduced its overall tax bill as it had concluded it was not in the best interest of shareholders.
Such a strategy was mooted by drugs firm Pfizer earlier this year during its failed attempt to buy British pharmaceuticals giant AstraZeneca.