The largest drugstore in the US, Walgreens have finalised a deal to buy 45 percent of Alliance Boots in the UK, subsequently taking nearly half of the control over Boots, Britain’s largest pharmaceutical store.
Walgreens have had to cough up $6.7 billion to complete the massive strategic partnership which is guaranteed to dominate the industry on a global scale for the foreseeable future.
$4 billion of the payment will be in the form of cash while the rest is in the form of shares. The deal also consists of an option for Walgreens to purchase the remainder of the company at any point over the next three years.
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In 2007, Stefano Pessina, an Italian businessman took Alliance Boots private in an $11 billion deal and has invested plenty more in the years that followed with the backing of KKR.
Of the new deal, Mr Pessina said: "This strategic transaction represents a further vital step in achieving our vision of becoming a global healthcare leader.
“The fit is natural; Walgreen’s consumer profile in the US is similar to Boots in the UK in many ways: a trusted and much-loved pharmacy brand with a strong heritage.
"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."
The aim of the partnership over the next four years has one target in mind: global domination. 11,000 stores across 12 countries is the goal, while it plans to have the largest pharmaceutical wholesale and distribution network in the world, comprising of 370 distribution points, delivering to doctor’s surgeries, hospitals and over 170,000 pharmacies. The company also expects to be the largest purchaser of prescription drugs in the world; all combining to create synergies to the value of between $100 million and $150 million in the first year, and up to $1 billion by 2017.
Chief Executive of Walgreens, Gregory Wasson has spoken of the deal:"We are bringing together the strengths and expertise of each company to create a worldwide healthcare platform for the future.
“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."