Walgreens and Alliance Boots deal has travel retail scope

By Kevin Rozario |

The decision by US health and well-being retailer Walgreens to buy the remaining 55% of UK-based Alliance Boots – announced this week – gives the latter more scope to develop its international and travel retail footprint, in both mature and emerging markets.

 

The new company, Walgreens Boots Alliance, will be headquartered in the Chicago area and will be the first global pharmacy-led, health and wellbeing enterprise. Boots will continue to be headquartered in Nottingham, UK.

 

At the end of March (which is Alliance Boots’ financial year-end) Boots had a total of 39 airport stores under its flagship brand in 14 airports in the UK. Internationally, it has another 11 airport stores in Thailand and the Gulf region. This does not include the additional Boots stores at rail stations in the UK.

 

The new global entity, Walgreens Boots Alliance will consist of four divisions: Walgreen Co. (the largest drugstore chain in the US); Boots (the UK and Republic of Ireland’s leading pharmacy-led health and beauty retailer); Pharmaceutical Wholesale and International Retail (including Alliance Healthcare, Europe’s largest pharmaceutical wholesaler); and Global Brands.

 

The transaction is expected to complete in the first quarter of calendar 2015, subject to shareholder and various regulatory approvals.

 

GLOBAL AMBITIONS

While the company did not comment on its travel retail plans, it has identified international expansion, own brand expansion, and taking a bigger slice of the beauty market as key long-term aims.

 

Furthermore, Alliance Boots has pointed out that like-for-like retail store growth (which excludes Boots.com orders collected in store) increased by +1.3% in its last financial year “with the highest growth rates being in our flagship and airport stores”.

 

Within the £7,662m ($12,886m) Health and Beauty division, the international business had a £965m ($1,624m) share. However, at constant currency, international growth was +3.9% compared to the UK’s +2.3%. The international business also saw profits grow faster at +6.4% versus 2.1% for the UK.

 

Stefano Pessina (left), Executive Chairman, Alliance Boots, comments:  “The expected creation of the new enterprise will represent the most significant milestone in the history of our group. Together with Walgreens, we have already made good progress over the past two years and I strongly believe that the merger will bring significant growth opportunities for both mature and emerging markets.”

 

Greg Wasson, President and CEO, Walgreens, adds:  “Expanding globally with Alliance Boots will make quality healthcare more affordable and accessible to communities here in America and around the world.”

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