Walgreens and Boots Combination, Where are the Synergies?

The American drug store chain Walgreens has agreed to buy a 45 percent stake in Alliance Boots, the European pharmacy retailer, for $6.7 billion, in a deal that could allow it to take full control of Alliance Boots by 2015.

The deal will create one of the world’s largest drug store and pharmacy retailers with more than 11,000 stores in 12 countries. The acquisition also would allow Walgreens to expand into overseas markets, and give Alliance Boots a presence in the Unites States that it has long wanted.

“Today’s announcement represents an exciting opportunity to accelerate our five core strategies and advance that mission in the U.S. and now internationally,” Gregory Wasson, chief executive of Walgreens, said in a statement.

Finding the synergies in this deal will be challenging beyond extending two large brand names on an international scale.  Few in the US know the Boots brand and likewise, Walgreens is not a household name outside of the US.  Both will need to leverage the Americanization of the Brand.  In healthcare and pharmaceuticals, American brands are highly regarded internationally, so expect this to come into play as this new combination extends their reach.

Time will tell if buying leverage will truly play out in the branded world of Rx but certainly in the world of consumer, private label and generics, bigger is better!

Stay tuned



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