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United States’ largest drugstore chain Walgreens (NYSE:WAG) announced today it entered into a “strategic transaction” by buying 45% interest in Europe’s leading health and beauty group, Alliance Boots, creating “the first global pharmacy-led, health and wellbeing enterprise.”.
The deal is valued at US$6.7 billion, comprising of $4 billion in cash and 83.4 million shares to be issued by Walgreens to Alliance Boots, with an option for a full combination by acquiring the remaining 55% of Alliance Boots within the next three years.
Privately-held Alliance Boots Holdings Limited stated:
“This transaction will bring together two great companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted healthcare services, through pharmaceutical wholesaling and community pharmacy care, dating back over 100 years.”
Natural Fit
“The fit is natural,” said Alliance Boot’s Executive Chairman Stefano Pessina, who will sit on the Board of Walgreens upon completion of the transaction in September 2012.
“Walgreens consumer profile in the U.S. is similar to Boots in the UK in many ways: a trusted and much-loved pharmacy brand with a strong heritage.”
With more than 7,800 drugstores in all 50 states of the US, the District of Columbia and Puerto Rico, Walgreens services six million customers a day, reaching $72 billion pharmacy, health, and wellness services sales in 2011.
Alliance Boots, on the other hand, is Europe’s largest pharmacy-led health and beauty retailer, wholesaler, and distributor, present in 25 countries, including the United States.
A privately-held company since 2007, Alliance Boots’ reported annual revenue ending 31st March 2012 was at £23 billion ($39.4 billion), with EBITDA of £1.443 billion ($2.237 billion), including its share from joint ventures and associates.
Following the transaction, the two companies will now become the world’s largest purchaser of prescription drugs with over 370 global pharmaceutical wholesale and distribution network in 21 countries.
Should Walgreens decide to exercise its option to fully combine with Alliance Boots, a further £3.1 billion ($4.9 billion) in cash and issue 144.4 million shares for the remaining equity of Alliance Boots, the transaction requiring shareholder approval.
The acquisition announced today does not require shareholder approval, but is subject to regulatory nod.
CEO Comments
Gregory Wasson, President and Chief Executive Officer of Walgreens, commenting on the deal, said:
“At Walgreens, our mission is to be America’s first choice for health and daily living – helping our customers to live well, stay well and get well. Today’s announcement represents an exciting opportunity to accelerate our five core strategies and advance that mission – in the U.S. and now internationally. We are bringing together the strengths and expertise of each company to create a worldwide healthcare platform for the future that can provide innovative ways to address global health and wellness challenges.”
“We are looking forward to working with Alliance Boots to leverage our combined strengths and provide an even broader range of innovative, cost-effective products and services to patients and customers across the healthcare landscape. Together we will be ideally positioned to expand our customer offerings in our existing markets and become the health and wellbeing partner of choice in emerging markets.”
Company Spotlight
The largest drugstore chain in the United States, Walgreens ranked 32nd on the Fortune 500 and 104th in the Global Fortune 500 Largest Companies, and consistently included in Fortune’s World’s Most Admired Companies list.
Listed on both the NASDAQ and the New York Stock Exchange, Walgreens closed US$31.96 per share on 18th June 2012.
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