Walgreen (WAG) to Invest $6.7B for 45% Stake in Alliance Boots; Could Acquire Balance Over Next Three Years

June 19, 2012 6:24 AM EDT

Walgreen Co. (NYSE: WAG) and Alliance Boots GmbH entered into a strategic transaction "designed to bring together the strengths and expertise of both companies to create the first global pharmacy-led, health and wellbeing enterprise."

Walgreens will invest approximately $6.7 billion in cash and stock (comprised of $4.0 billion in cash and 83.4 million shares) in exchange for a 45% equity ownership stake in Alliance Boots. Walgreens will have the option to proceed to a full combination by acquiring the remaining 55% of Alliance Boots in approximately three years’ time.

At the current Walgreens share price and at a $1.55=£1 exchange rate, the second step of the transaction would be valued at approximately $9.5 billion in cash and stock, plus the assumption of Alliance Boots then-outstanding debt. Completion of the initial investment, which is subject to various regulatory approvals, is expected to take place by September 1, 2012.

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