Walgreen to acquire 45 % in Alliance Boots for $6.7 billion

19 Jun 2012

1

US drugstore operator Walgreen Co today said that it would acquire a 45 per cent stake in European pharmacy retailer Alliance Boots for $6.7 billion in cash and stock, a deal that would bring together the two largest pharmacy chains in the US and Europe.

Deerfield, Illinois-based Walgreen will initially invest about $4 billion in cash and 83.4 million shares for a 45 per cent stake in Zug, Switzerland-based Alliance Boots.

Walgreen will have the option to acquire the remaining stake by 2015 for around $9.5 billion based on Walgreen's current share price and exchange rate.

Private equity firm Kohlberg Kravis Roberts (KKR), which invested $2.45 billion in Alliance Boots in 2007, (See: KKR-Pessina combine to buy Alliance Boots for $22.2 billion) will receive $2 billion in cash and stock and a seat on Walgreen's board.

The exchange rate has affected KKR's return on investment, but it said that the company's profits had increased 88 per cent since the buyout in 2007.

The Walgreen-Alliance Boots deal will create one of the world's largest drug store and pharmacy retailers with more than 11,000 stores in 12 countries, 365,000 employees worldwide, revenue of around $110 billion, market leaders in Europe and the US and the world's largest pharmacy wholesale and distribution network.

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