Walgreen to keep U.S. tax domicile after buying Alliance Boots

Wed Aug 6, 2014 2:52pm EDT
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By Emma Thomasson and Sruthi Ramakrishnan

(Reuters) - U.S. retailer Walgreen Co WAG.N said it would not use a full takeover of Europe's biggest pharmacy chain, Alliance Boots [ABN.UL], to move its domicile overseas, following fierce criticism of such tax-cutting deals at home.

Walgreen will buy the 55 percent it does not already own of Alliance Boots for 3.13 billion pounds ($5.3 billion) in cash and 144.3 million shares, giving a total deal of about $15 billion.

Walgreen shares fell as much as 16 percent to $58.30 on Wednesday.

The U.S. group said the combined company, with more than 11,000 stores in 10 countries, would keep its tax domicile in the United States, with headquarters in the Chicago area. It is targeting combined revenue for 2016 of $126-130 billion.

Walgreen's retreat is the third major possible tax "inversion" deal to collapse in recent months amid heightened political sensitivity in the United States to such transactions.

Walgreen had been under pressure from investors to shift its tax domicile to Switzerland or Britain as part of the buyout, but the administration of President Barack Obama said on Tuesday it was considering steps to curb such deals.

The pharmacy chain said it was mindful of the public reaction to a potential inversion deal and its role as an "iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs".

"The company concluded it was not in the best long-term interest of our shareholders to attempt to re-domicile outside the U.S.," CEO Greg Wasson said in a statement.   Continued...

A Walgreens logo is seen outside its store in New York City, September 18, 2013. REUTERS/Mike Segar