Shareholders of suburban Chicago-based Walgreen Co. (WAG), commonly known as Walgreens, has finally approved its acquisition of the remaining 55% of its European counterpart Alliance Boots GmbH, with the subsequent reorganization of the company into a holding company structure.
During the process, approximately 97% of the investors cast their votes in favor of the reorganization proposal while 97% of the votes cast came in favor of the share issuance proposal.
In June 2012, Walgreens had entered into a long-term partnership with the then leading international pharmacy-led health and beauty group – Alliance Boots GmbH. At that time, Walgreens had acquired a 45% equity ownership in Alliance Boots for roughly $6.7 billion in cash and stock.
Later, in Aug 2014, Walgreens' management exercised its option to buy the remaining 55% of Alliance Boots, for $5.29 billion in cash and approximately 144.3 million shares of common stock of Walgreens.
Both companies have received all regulatory approvals needed to complete the transaction. With the aforementioned shareholders' approval in place, Walgreens now expects to complete the remaining acquisition of Alliance Boots and the reorganization merger on Dec 31, subject to the satisfaction of customary closing conditions.
The transaction, once over, will create the first pharmacy-led, health and wellbeing enterprise in the global space.
At the end of the acquisition, Walgreens will become a wholly owned subsidiary of Walgreens Boots Alliance, Inc. Shares of this combined new company will be listed on the Nasdaq stock exchange and will trade under the ticker symbol, WBA.
Walgreens Boots Alliance will continue to operate from its base in Deerfield, IL.
So far, Walgreens' partnership with Alliance Boots has been yielding positive results, with combined synergies reaching $140 million in first-quarter fiscal 2015. Moreover, Alliance Boots contributed 11 cents per share to Walgreens' first-quarter fiscal 2015 adjusted net earnings. The company expects this joint synergy program to deliver approximately $650 million in fiscal 2015.
This alliance fits well with Walgreens' strategy to advance community pharmacy and bring additional specialty pharmacy products and services closer to patients.
Zacks Rank
Walgreens currently has a Zacks Rank #3 (Hold). Some better-ranked companies worth reckoning in the broader medical sector are EnteroMedics Inc. (ETRM), Fluidigm Corp. (FLDM) and Inogen, Inc. (INGN). All these stocks hold a Zacks Rank #1 (Strong Buy).
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