Beauty Store Business magazine - January, 2020

Walgreens, Alliance Boots Finalize Merger

Walgreen Co. and Alliance Boots have finalized their two-step merger launched in 2012 to form Walgreens Boots Alliance—marketed as the world's first global pharmacy-led health and well-being enterprise.

Under a reorganization merger agreement approved in the last week of December 2014 by Walgreens' shareholders, Walgreens is now a wholly owned subsidiary of Walgreens Boots Alliance. Existing shares of Walgreens common stock were converted automatically into shares of Walgreens Boots Alliance common stock on a one-for-one basis. Walgreens Boots Alliance common stock will trade on the Nasdaq stock exchange under the symbol WBA.

“The creation of Walgreens Boots Alliance is a crucial milestone for both Walgreens and Alliance Boots, combining iconic brands, complementary geographic footprints, shared values and a heritage of trusted healthcare services through pharmaceutical wholesaling and community pharmacy care, each dating back more than 100 years,” said Greg Wasson, who is retiring as Walgreens president and CEO after completion of the merger. “The combination instantly establishes a groundbreaking and game-changing new company that will help people across the world lead healthier and happier lives as we advance our industry and the delivery of retail health, well-being and beauty products and services worldwide.”

The new, global enterprise boasts the combination of Walgreens, the largest chain drugstore in the United States; Boots, the market leader in European retail pharmacy; and Alliance Healthcare, the leading international wholesaler and distributor. Together, Walgreens Boots Alliance spans more than 25 countries, with more than 12,800 stores, more than 370,000 employees and more than 340 pharmaceutical distribution centers serving more than 180,000 pharmacies and other points of care.

The merger also brings together a unique brand portfolio of outstanding retail, wholesale, service and product brands, alongside the world’s largest pharmaceutical wholesale and distribution network. Walgreens Boots Alliance will be domiciled in the United States and headquartered in Deerfield, Illinois.

Stefano Pessina, who will become acting CEO of Walgreens Boots Alliance after Wasson’s retirement, stated, “The combined strength, scale and expertise of Walgreens Boots Alliance creates a unique and unparalleled global leader. We have forged a worldwide healthcare champion, which will provide innovative ways to address global health and well-being challenges by helping to shape retail pharmacy, health care and pharmaceutical wholesale markets around the world. Becoming global gives us the ability to generate significant and sustainable benefits for local markets and all stakeholders—from consumers and patients, to pharmacists, suppliers, business partners and, of course, our employees.”

Overseen by an international management team, Walgreens Boots Alliance comprises three divisions: Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale. In addition, the company operates a number of global cross-divisional functions, including Global Brands and a Global Pharmacy Market Access group.

Walgreens and Alliance Boots announced their two-step strategic transaction in June 2012. They completed Step 1 in August 2012 when Walgreens invested about $4 billion in cash and 83.4 million shares of its common stock in exchange for a 45% equity-ownership stake in Alliance Boots. With the recent announcement of the completion of Step 2, Walgreens has acquired the remaining 55% of Alliance Boots in exchange for about $5.3 billion in cash and 144.3 million shares of stock.

Since the strategic partnership began in 2012, Walgreens and Alliance Boots have achieved several significant goals while preparing for the merger. These include senior-leadership exchanges, successful synergy generation, a joint own-brand sourcing program in Asia and the sharing of best practices and innovative technologies. In addition, the companies launched No7 and other Boots product brands in Walgreens stores across the United States.

The completion of this strategic transaction marks a historic milestone for both companies with roots going back more than a century. Walgreens has grown from a single corner in Chicago in 1901 to the best corners in America. Alliance Boots has grown from two European businesses: Boots the Chemist, established as a community pharmacy in Nottingham, United Kingdom, in 1849, and now an international leader in health-and-beauty retailing; and Alliance Healthcare, which developed from its distribution roots in European countries in the 19th century to become an international leader in pharmaceutical wholesaling. In addition, more than 6,000 independent pharmacists across eight European countries are benefiting as members of its Alphega Pharmacy network.

Today, Walgreens Boots Alliance (with its equity-method investments) has a retail pharmacy network spanning the United States and Europe as well as key markets in Latin America and Asia, with growth opportunities in many developing and underserved markets across the world.

Its portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as increasingly global health-and-beauty product brands, such as No7 and Botanics.

[Image courtesy of Walgreens Boots Alliance]