Walgreen Co, the largest drugstore company in the U.S., has gone transcontinental with its acquisition of a 45-percent stake in Boots, the U.K.-based drug-store giant, for $6.7 billion.
The two companies also are looking to a full merger in three years for further $9.5 billion, plus the assumption of Boots' then-outstanding debt. Combined they'll have 11,000 stores in 12 countries, prompting Walgreen's press release headline, "Walgreens and Alliance Boots Form Strategic Partnership to Create the First Global Pharmacy-Led, Health and Wellbeing Enterprise."
The deal represents another in a growing string of incursions by relatively healthy American companies into an ailing European economic scene, to the tune of about $43 billion overall so far this year. Alliance Boots Executive Chairman Stefano Pessina, meanwhile, has finally struck the big deal he was seeking in order to "transform" the business and future of becoming a global healthcare leader.
"Today's announcement represents an exciting opportunity to accelerate our ... core strategies and advance that mission in the U.S. and now internationally," Greg Wasson, Walgreens CEO, said in a statement.
The Chicago-based giant, which owns and operates Walgreens stores across America in addition to the Duane Reade chain in and around New York, talked up the deal on the company's quarterly earnings call today with analysts.
For Pessina, the Italian billionaire who owns Alliance Boots, the move is a "transformational deal" to obtain a foothold in the U.S. "This strategic transaction represents a vital step in achieving our vision of becoming a global healthcare leader," he said, according to the Financial Times.
Pessina rejected the notion that the Boots brand would fade. "I have done a deal to make Boots more visible, more international, to crate a lot of new markets for Boots," he said.
The deal means Walgreens and Duane Reade stores in the U.S. can add Boots brands such as No7 cosmetics (sold in the U.S. at Target and at ShopBootsUSA.com) while Walgreens and Duane Reade private label products also could be sold in Boots stores in Europe.
And there are probably more big transatlantic deals to come as Europe continues to struggle.
[Image above: Alliance Boots Executive Chairman Pessina (left) and Walgreens President and CEO Wasson]