Walgreen’s earnings grow but questions raised on Boots buyout
US HIGH street chemists Walgreen, which owns 45 per cent of UK rival Alliance Boots, yesterday announced a 16 per cent jump in quarterly earnings, though it missed Wall Street’s expectations.
Walgreen, which paid $6.7bn (£3.95bn) for its share of Boots in 2012, said the results were aided in part by a lower income tax rate, but it added that key decisions still needed to be made about its future with the UK firm.
The US company has an option in 2016 to buy the rest of Boots, and might then consider a corporate inversion, in which an American company claims residence in a foreign country to reduce its tax bill.
A number of other companies, particularly in the pharmaceutical industry, have weighed up that step this year.
Walgreen chief executive Greg Wasson said that he and Boots executive chairman Stefano Pessina were working on the next phase of their partnership, pointing to “complex issues in planning”.
Walgreen is evaluating options for the “second step” of its combined strategic transaction with Alliance Boots, including what Wasson described as “additional synergies and potential changes to the capital structure”.
Wasson noted that Boots’ beauty products would soon begin rolling out across the US, adding that they were already in a couple of markets, including 125 Walgreen and Duane Reade stores in New York City.
Walgreen’s NYSE shares yesterday closed down 1.71 per cent at $72.48.