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The last day of 2014 has become the birth day of the new Walgreens Boots Alliance (NASDAQ:WBA). Walgreens, America’s leading pharmacy, has completed the acquisition of Alliance Boots, including delisting from the NYSE (it had been dual listed on the NYSE and NASDAQ) and conversion of its stock symbol from WAG to WBA.
Walgreens generated $76 billion in revenue in 2014 from its more than 8,200 U.S. stores and its online offerings. Today marked the completion of a process that began in June 2012 when Walmart acquired 45% of Alliance Boots for a sum of $6.7 billion, of which $4 billion was in cash, with the remainder in 83.4 million Walgreen shares. The consummation today saw another $5.3 billion and 144.3 million shares change hands. Walgreens finished its last quarter with a 16% increase in revenue. The company’s share price has increased by 33% over the past 12 months.
Walgreens was one of the “great” companies included in Jim Collins’ business strategy classic, From Good to Great, published in 2001. One of the distinctly different things that set Walgreens apart from competitors was that it embraced a strategy of opening new stores in much closer proximity to its already successful locations than its peers had done. The reasoning, based on the concept of convenience being a part of perceived quality, propelled Walgreens to the front of the pharmacy foray. Perhaps, the fact that the 2,500 Boots locations put at least one of their stores within a 10 minutes drive for nearly the entire British population was one of the reasons that Boots was especially attractive to Walgreens.
The new Walgreens Boots Alliance will serve customers in more than 25 countries with:
- over 12,800 stores
- more than 370,000 employees
- over 340 distribution centers
- in excess of 180,000 pharmacies and other points of care
Greg Wasson, retiring Walgreens president and CEO, noted that, “The creation of Walgreens Boots Alliance is a crucial milestone for both Walgreens and Alliance Boots, combining iconic brands, complementary geographic footprints, shared values and a heritage of trusted health care services through pharmaceutical wholesaling and community pharmacy care, each dating back more than 100 years.”
Incoming acting CEO, Stefano Pessina, declared that, “The combined strength, scale and expertise of Walgreens Boots Alliance creates a unique and unparalleled global leader. We have forged a worldwide health care champion, which will provide innovative ways to address global health and wellbeing challenges by helping to shape retail pharmacy, health care and pharmaceutical wholesale markets around the world. Becoming global gives us the ability to generate significant and sustainable benefits for local markets and all stakeholders, from consumers and patients, to pharmacists, suppliers, business partners and, of course, our employees.”
The new company will boast three separate divisions, Retail Pharmacy USA, Retail Pharmacy International, and Pharmaceutical Wholesale. It will retain its U.S. headquarters in the Deerfield, Illinois, surprising many who expected the acquisition to be a cover-up for a tax inversion.
With the completion of the alliance, WBA has now become the largest purchaser of prescription drugs in the world.
WBA closed today at $76.39, up 0.45%, on a volume of 1.826 million shares.
