Alliance Boots to merge with US giant Walgreens

THE 1,400 jobs at Boots’s 72 stores in the Republic are not expected to be affected by its merger with Walgreens, the US pharmacy chain.

Stefano Pessina, chairman of Alliance Boots, insisted the deal was not the end for Boots.

“How could I do a deal to kill Boots?” he said. “I have been after Boots for years ... I have done a deal to make Boots more visible, more international, to create a lot of new markets for Boots and for at Nottingham.”

Boots operates 72 stores in the Republic and Boots Retail (Ireland) Ltd had a turnover of €267 million in the year to March 2011. It reported as profit of €12.9 million.

Mr Pessina said he has achieved his aim of striking a “transformational deal” and obtaining a presence in the US, by selling a 45 per cent stake in the retail and wholesale pharmaceutical group to Walgreens.

Alliance Boots, which is owned by private equity firm Kohlberg Kravis Roberts and Mr Pessina, said it would sell the stake to Walgreens for $6.7 billion in cash and shares.

Mr Pessina will take about a third of the proceeds from the first stage of the deal in shares, representing about 8 per cent of Walgreens. He will not be taking any cash at this stage.

The two groups will look to a full merger in three years for a further $9.5 billion, plus the assumption of Alliance Boots’ then outstanding debt.

“This strategic transaction represents a further vital step in achieving our vision of becoming a global healthcare leader,” Mr Pessina said yesterday.

“We believe that it will bring clear benefits to all stakeholders, creating significant and sustainable industrial value through synergies and the deployment of our joint expertise.”

Mr Pessina said he had chosen a merger rather than an IPO for Boots because “if you do an IPO, you create financial value. If you do a transformational deal, you create financial value and industrial value and you have a lot of synergies”. – (Additional reporting the Financial Times)