Walgreens on Global Path, Buys Stake in Alliance Boots
Can you imagine a future in which there is a Walgreens on every busy street corner location across the globe? That day may be closer than you think.
Walgreens, the largest pharmacy chain in the U.S., has announced a deal giving it a 45 percent stake in Alliance Boots, the biggest drugstore operator in Europe. The deal, valued at $6.7 billion in cash and stock, appears to be just the start, with Walgreens having the option of buying the rest of Boots over the next three years.
The combined companies will have over 11,000 stores in 12 different countries and the largest pharmaceutical wholesale and distribution network on the planet. Walgreens and Alliance Boots, which is owned by Kohlberg Kravis Roberts, sees significant "revenue synergies" that will come with the introduction of Alliance Boots products to Walgreens and Duane Reade stores in the U.S. The two companies also expect to share best practices in "pharmacy operations, health and wellness services and logistics."
The deal has been set up to give the management teams three years to integrate the companies.
"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," said Gregory Wasson, president and CEO of Walgreens, in a statement. "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."
"The fit is natural. 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," added Stefano Pessina, executive chairman of Alliance Boots. "Our pharmaceutical wholesale businesses will provide their logistics know-how to Walgreens and are well placed to be one of the growth engines of the new enterprise."
- Walgreens and Alliance Boots Form Strategic Partnership to Create the First Global Pharmacy-Led, Health and Wellbeing Enterprise – Walgreen Co.
- Walgreen buys stake in European drug store chain for $6.7B – Reuters/Chicago Tribune
- Walgreens pays $6.7bn for 45% of Boots – Financial Times
Discussion Questions: What is your reaction to the Walgreens/Alliance Boots deal? Is this the type of merger that tends to be successful? How will it affect the retail pharmacy market in the U.S. and Europe?