DealBook: Walgreen to Pay $5.27 Billion Plus Shares for Alliance Boots

LONDON – The Walgreen Company said on Wednesday that it would pay about $5.27 billion in cash, plus shares, to acquire the rest of the British pharmacy chain Alliance Boots that it doesn't already own, but will keep its corporate headquarters in the United States.

The deal comes amid a rush of mergers in which American companies have pursued smaller foreign partners to reincorporate overseas and to avoid higher corporate taxes in the United States, a tactic known as an inversion.

Inversions have faced increased scrutiny from American politicians in recent months and, to engage in one, Walgreen would have been forced to renegotiate its existing agreement with Alliance Boots, which the British retailer was unwilling to do, according to a person briefed on the matter.

"The company concluded it was not in the best long-term interest of our shareholders to attempt to re-domicile outside the U.S," Greg Wasson, the Walgreen president and chief executive, said in a news release.

But he said that the full takeover of Alliance Boots "was in the best interest of our shareholders, and with this decision, we are now moving forward on an accelerated basis to create the global leader in pharmacy-led health and well-being."

Walgreen, based in Deerfield, Ill., first took a 45 percent stake in the British chain in 2012 and had a three-year option to acquire the rest of the company. Walgreen paid about $6.7 billion for its stake two years ago

Under the deal, Walgreen would pay 3.13 billion pounds, or about $5.27 billion, in cash and about 144.3 millions shares of Walgreen to acquire the 55 percent of Alliance Boots it doesn't own from its other owners. They include Kohlberg Kravis Roberts and the Italian billionaire Stefano Pessina, the Alliance Boots executive chairman.

Mr. Pessina would serve as vice chairman of the combined company following the acquisition.

The combined company would operate about 11,000 stores in 10 countries and create the world's largest pharmaceutical wholesale and distribution network with more than 370 distribution centers.

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