By Zanub Saeed
Walgreens announced that it will pay $6.7 billion in cash and stock for the purchase of European health and beauty retailer Alliance Boots, as part of their first international venture, said the Associated Press on Tuesday.
Walgreens Co. noted that it will initially spend about $4 billion in cash and give over 83 million shares for a 45 percent ownership with Alliance Boots, based in Switzerland. The company has over 3,300 health and beauty stores in 11 countries throughout Europe, said the Associated Press. The rest of the company will be purchased by Walgreens over a three-year plan for about $9.5 billion, based on the U.S. corporation's share price and the present exchange rate.
"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," Gregory Wasson, president and CEO of Walgreens said to Progressive Grocer Store Brands' blog. "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."
After splitting with the largest U.S. pharmacy benefits manager Express Scripts Holding Co. recently, Walgreens felt a decrease in sales for several months since it stopped filling subscription with the pharmacy benefits manager, noted the AP. Walgreen's third-quarter fiscal earnings also went down by 11 percent partly due to the parting with Express Holdings.
This is the biggest business deal Walgreens has made to date, said The Wall Street Journal. Prior to the merger with Alliance Boots, its biggest deal was with New York drugstore chain Duane Reade in early 2010 for around $620 million in cash and $480 in assumed debt, said the report. Walgreens also recently purchased online retailer Drugstore.com Inc., and mail-service pharmacy operations from BioScript, said the Journal, both at $500 million each. This was all done before their acquisition of Alliance Boots.
"Today's announcement is testimony to the great track record and accomplishments of the Alliance Healthcare and Boots teams that have delivered strong growth since the creation of Alliance Boots six years ago and its subsequent privatization," Stefano Pessina, executive chairman of Alliance Boots, told Progressive Grocer Store Brands' blog. "I strongly believe that this transaction offers further significant growth opportunities and marks a very positive milestone for the healthcare industry as a whole."
