Pharmacy giant Alliance Boots has sold 55 per cent of its business to US pharmacy Walgreens in a £9bn deal.
The deal, which does not qualify for a controversial tax inversion, is expected to be completed in the first quarter of 2015 and will see Walgreens keep its headquarters in the US amid increased scrutiny from US tax authorities.
Chief executive Greg Wasson said: “We took into account all factors, including that we could not arrive at a structure that provided the company and our board with the requisite level of confidence that a transaction of this significance would need to withstand extensive IRS review and scrutiny.”
It comes after President Obama criticised US firms that partake in tax inversions – the relocation of a corporation’s headquarters to a lower-tax nation while retaining its material operations in its higher-tax country of origin – as “gaming the system.”
The merger will give Italian billionaire Stefano Pessina, who has served as the executive chairman of Alliance Boots since 2007, £1.5bn in cash and £2.95bn in shares making him the company’s largest shareholder. He will lead on strategy and mergers and acquisitions.
The merger is expected to deliver over $1bn in cost savings by the end of 2017 and will create an estate of 11,000 stores across 10 countries with 350,000 staff employed.
During a conference call with Wall Street analysts, Wasson said he believed that EBITDA would be “flat to a little up” through 2016.