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US chain to buy Boots in £10bn deal

The largest pharmacy chain in the US swooped on high street chemist Boots yesterday as part of a shock £10bn (€12.4bn) takeover deal.

Walgreens will initially acquire 45% of Alliance Boots, a business that includes a major European pharmaceutical wholesale arm, with an option to snap up the rest by 2015.

The pair hope their partnership will create the industry’s first “global player” with 11,000 stores in 12 countries and serving over 170,000 pharmacies and health centres in 21 countries.

It means brands such as No7 and Botanics will be sold in nearly 8,000 Walgreens and Duane Reade stores in the US, while Walgreens products will be introduced to Boots stores.

Alliance Boots executive chairman Stefano Pessina, who took the Nottingham-based business private in 2007 following an £11.1bn deal, said the two businesses were a natural fit.

Asked whether the Boots brand would survive, he said: “How could I do a deal killing Boots? I could never have done this, I have been at Boots for years and years.

“I have done a deal to make Boots more visible, more international, to create new markets for Boots and for Nottingham. I am very excited — I have always believed our industry needed a global player.”

Gregory Wasson, president and chief executive of Walgreens, said the development team at Nottingham was one of the most exciting aspects of the tie-up, and he and his wife had been impressed by the No7 range. He claimed the deal would bring together two “iconic brands”.

The deal will see Walgreens pay $4bn in cash and shares currently worth $2.7bn.

In three years, it has the option to buy the rest of the company for another $9.5bn in cash and shares at current prices, bringing a total price of $16.2bn and will also take on the company’s debt. Mr Pessina will take an 8% stake in Walgreens.

Alliance Boots traces its roots back to 1849 when John Boot opened his first store selling herbal remedies in Goose Gate, Nottingham. Alliance Boots operates 2,500 stores and employs 75,000 staff in Britain. It has 55 Irish stores.

Walgreens was founded over a century ago and filed one in five retail prescriptions in the US last year.

There are no plans for any job cuts.

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