Boston, MA 05/21/2014 (wallstreetpr) – Walgreen Company (NYSE:WAG) is gearing up for takeover of Alliance Boots GmbH, the largest chemist of Britain. At present, Walgreen holds 45% stake in Boots. The option of acquiring the rest of 55% is also open, and it might plan it somewhere between February to August in the year 2015.
Acquisition of 45% stake in Alliance Boots
Walgreen Company (NYSE:WAG), in August 2012, had acquired 45% stake in the British company in a deal worth $6.7 billion. At the same time, Walgreen also got hold of the call option for buying the rest of 55% stake over the period of six months starting February 2, 2015. The remaining 55% stake option might be bought for 144.3 million Walgreen shares and £3.1 billion in cash.
Benefit of 45% stake in Alliance Boots for Walgreen
By acquiring 45% stake in Alliance Boots, Walgreen Company (NYSE:WAG) has received a benefit of expansion of its operations outside the realms of the U.S. Walgreen has managed in capturing high-growth markets and also receive the benefit through the synergies by making improvements in its supply chain efficiency. During the 2013 financial year, the synergies which were created through the acquisition helped Walgreen in saving $154 million. It is a result of this acquisition that the company can save $400 million in the present fiscal year. It is estimated that by the time Walgreen reaches 2016, it would be able to save approximately $1 billion with the help of collaboration.
Need to Exercise Call Option for 55% Stake in Alliance Boots
Considering the number of benefits gained by Walgreen through its stake in Alliance Boots, it is most likely that Walgreen would exercise its call option for 55% stake in the Boots. The acquisition of the British company will allow Walgreen to get better synergies and thus extract the benefit of expanding its operations to Europe as well.
