Walgreen Co. (NASDAQ:WAG) Will not make an Inversion Deal with Alliance Boots

Walgreen Co. (NASDAQ:WAG), the U.S.-based retailer, faced severe criticism from their homeland because of their tax-cutting deal to take over Alliance Boots, the pharmacy giant of Europe. Walgreen Co. (NASDAQ:WAG) said that they are not using this deal to move their base overseas. The company, already in ownership of 45% part of Alliance Boots, will take complete ownership of the company for a total of about $15 billion, of which $5.3 billion will be paid in cash and the rest will be paid as 144.3 million shares. Walgreen Co. (NASDAQ:WAG)’s shares declined by 16% and closed at $58.30 this Wednesday.

Walgreen Co. (NASDAQ:WAG) said that the new combined company, which will have over 11,000 stores, spanning 10 countries, will continue to keep its domicile in U.S. The headquarters will be in Chicago. The combined company has set its revenue target for the fiscal 2016 at $126-130 billion.

The United States has developed sensitivity towards such transactions as those between Walgreen Co. (NASDAQ:WAG) and Alliance Boots recently. This deal may possibly the third deal made by Walgreen Co. (NASDAQ:WAG) that will collapse soon. The company’s investors had urged the company to move its domicile overseas as a part of this deal. But just this Tuesday, President Obama said that his administration will take certain steps in order to stop such deals. Walgreen Co. (NASDAQ:WAG) claims to be considerate about the reaction of the masses to such a tax-inversion deal. They also claim that they understand their position as a major American consumer company whose revenue is largely derived from government-funded programs. The CEO, Greg Wasson, said that his company believes it is in the best interest of shareholders to keep their domicile in U.S.

The new combined company will be named as Walgreens Boots Alliance Inc. The CEO of the combined company will be Greg Wasson and Stefano Pessina, the current CEO of Alliance Boots, will be the executive vice-chairman of the combined company. According to Kelly Tackett of Planet Retail, Pessina will play an integral role in ensuring that the combined company secures its position as the largest drugstore in the global market. She said that the firm is expecting more acquisitions after this.

After Walgreen Co. (NASDAQ:WAG) acquired 45% of Alliance Boots in 2012, Pessina increased his share in Walgreen Co. (NASDAQ:WAG) by 8%, becoming the largest shareholder. After the new deal closes by 2015, Pessina will be the largest shareholder in the combined company as well. However, news was leaked on Tuesday that Walgreen Co. (NASDAQ:WAG) will not make an inversion deal. As a result, the company shares fell by 4.4% and closed at $69.12. Walgreen Co. is now taking advice from Lazard and Goldman Sachs on the deal. An inversion deal basically means that a U.S. based company establishes or purchases a foreign company, then moves its domicile to the foreign country as well as U.S. The core operations remain within the U.S. Such a deal allows the company to make tax-cutting steps.