Boots and Walgreens deal to go ahead

Alliance Boots is to sell a 45 per cent stake to its US larger equivalent Walgreens for $6.5 billion in a tie-up that Stefano Pessina, head of Boots, has wanted for a long time.

The deal is to take place in two stages and may lead to Walgreens becoming the outright owner of Boots, the chemist retail chain with 2,500 shops and 116,000 staff, set up in 1849.

Mr Pessina told the Financial Times, “I have done a deal to make Boots more visible, more international, to create a lot of new markets for Boots and for [the manufacturing facility in] Nottingham… Boots will thrive, not [just] survive.” He also asserted that Boots will not change as a result of the deal.

Walgreens will hand over $4 billion in cash and $2.5 billion in shares for the 45 per cent stake in Boots. And in the second stage of the deal will be able to purchase the remaining 55 per cent for $4.9 billion in cash and 144.3 million shares worth $4.3 billion.

Walgreens, established in 1901, operates almost 8,000 pharmacies in the US, with a workforce of 247,000, and is the largest drugstore chain in the country in terms of revenue, reporting $72 billion last year.

The US group will gain a worldwide presence via Boots’ stores and wholesale distribution operations.

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