Kohlberg Kravis Roberts & Co. (KKR) announced the sale of its outstanding stake in Switzerland-based Alliance Boots to Walgreens Boots Alliance, Inc., the new holding company of the largest U.S. drugstore chain Walgreen & Co. The deal merges the American leading drugstore chain with Europe's major pharmaceutical wholesaler.
Flashback
As part of the cash and stock transaction, Walgreen had bought a 45% stake of the European pharmacy retailer for $6.7 billion in Aug 2012. The purpose of initiating this deal was to form a new largest global pharmacy and health care entity by merging the two well established pharmaceutical firms into a holding company.
Kohlberg Kravis, which had a $1.8 billion investment in Alliance Boots, got $1.8 billion in cash and Walgreen shares worth around $200 million.
Walgreen was considering shifting base to Switzerland to obtain tax savings benefit through corporate inversion, which is often exercised by the U.S. firms while acquiring foreign companies to escape the high corporate tax rate prevalent locally. However, the company dismissed the idea fearing criticism given the rising anti-inversion environment as well as loss of revenues generated from government funded reimbursement plans.
Latest Update
Walgreen completed the acquisition of Alliance Boots on Dec 31, 2014 after shareholders of the former voted in favour of the merger and exercised their call option to acquire the remaining 55% stake. The new combined entity Walgreens Boots Alliance started trading on the NASDAQ under the ticker symbol “WBA” effective Dec 31.
Walgreens Boots Alliance, with over 12,800 stores in more than 25 countries, employs over 370,000 workers and extends its products and services through more than 340 pharmaceutical distribution outlets serving more than 180,000 pharmacies and other health care units.
Walgreen will now operate as a subsidiary of Walgreens Boots Alliance with existing shares of Walgreen converted to Walgreens Boots Alliance stock on a one-for-one basis. Other divisions of the new company comprise Boots – the U.K. and Republic of Ireland’s leading pharmacy-led health and beauty retailer, Pharmaceutical Wholesale and International Retail including Alliance Healthcare and Global Brands.
Moreover, Kohlberg Kravis will become shareholder of Walgreens Boots Alliance and hold around 4.6% equity of the latter for playing its part in the Walgreen–Alliance deal.
Our Take
As a global investment firm, Kohlberg Kravis has been active in the healthcare sector since a long time. The pharmaceuticals and medicine sector shows a steady uptrend and so the buyout firm has remained focused to capitalize on available opportunities and earn attractive returns.
Currently, Kohlberg Kravis carries a Zacks Rank #3 (Hold). Some better-ranked investment firms include Monroe Capital Corporation (MRCC), Signature Group Holdings, Inc. (SGGH) and The Blackstone Group L.P. (BX). While Monroe Capital and Signature Group hold a Zacks Rank #1 (Strong Buy), Blackstone sports a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment