US pharmacy giant Walgreens has announced it will complete its buy out of Alliance Boots in 2015.
The US chain will increase its shares in the multinational company from 45 per cent to 100 per cent in the first quarter of next year, it announced yesterday (August 6), to trade under the combined title of Walgreens Boots Alliance.
The move marks the final stage of the deal announced in 2012, which set out to make the combination of the two companies "the global leader in pharmacy-led, health and wellbeing retail".
Walgreens president Greg Wasson, who has been appointed CEO of the combined company, predicted "flat" profits over the next two years in a webcast held today (August 6). Profits for 2016 were unlikely to exceed $7.2 billion (£4.3 billion) despite initial projections of up to $9bn (£5.3bn), he said.
The company would aim to make $1bn (£593m) in combined savings by 2017 – later than its original target date of 2016 due to "global pressure" on pharmacy income, he added.
But Mr Wasson stressed there were opportunities for growth from 2017 onwards by focusing on retail, integrated pharmacy and healthcare services and global wholesaling opportunities.
Walgreens Boots Alliance will own more than 11,000 stores across 10 countries and will have the world's largest pharmaceutical wholesale and distribution network. Its newly formed management team will feature six Walgreens employees – including Alex Gourlay, who held the position of health and beauty chief executive at Alliance Boots until last year – and five Alliance Boots employees.
Former Alliance Boots executive chairman Stefano Pessina will assume the role of vice-president and hold responsibility for both strategy and mergers and acquisitions. In January, Mr Pessina narrowly survived an investor rebellion that could have restricted his powers at the company.
Under the new structure, Boots will be a division of the company in its own right and its headquarters will remain in Nottingham, while the global company's headquarters will be in Chicago. The company decided against moving its headquarters out of the US for tax purposes after "extensive analysis" of the benefits and disadvantages, Mr Wasson said.
Mr Pessina admitted he was not "particularly happy" about either company's financial performance over the past two years and said the merger would enable them to "renew their focus".
The buyout will be subject to shareholder and regulatory approvals.