Alliance Boots

Alliance Boots was an international pharmacy-led health, beauty and pharmaceutical distribution group created in 2006 through the merger of the British retailer Boots Group and the pan-European pharmacy wholesaler and retailer Alliance UniChem. The combination joined Boots' long-established high-street pharmacy and personal-care business with Alliance UniChem's pharmaceutical distribution network, creating a vertically integrated group spanning retail pharmacies, wholesale distribution, healthcare services, consumer brands and contract manufacturing. The group was headquartered in Switzerland, with corporate headquarters in Bern and important operational bases in Nottingham and Weybridge in the United Kingdom. Its principal businesses operated under the Boots and Alliance Healthcare names. Boots UK provided pharmacy services, prescription dispensing, over-the-counter medicines, beauty and personal-care products, cosmetics, optical services and selected health-screening services. Alliance Healthcare supplied medicines and related products to pharmacies, doctors, hospitals and health centres across numerous European and international markets. Alliance Boots initially remained a public company listed on the London Stock Exchange. In 2007 it was acquired by AB Acquisitions Limited in a highly leveraged private-equity transaction led by Stefano Pessina and Kohlberg Kravis Roberts. The transaction made Alliance Boots the first FTSE 100 company to be taken private by a private-equity firm. A Swiss corporate structure was established in 2008 after the buyout, while the group retained its principal British operating infrastructure. Walgreens acquired a 45 percent interest in Alliance Boots in 2012 as the first stage of a planned combination. The companies established a development company to coordinate integration and began introducing Boots products, including the No7 skincare line, into Walgreens locations in the United States. Walgreens exercised its option to acquire the remaining interest in 2014. After shareholder and regulatory approvals, the transaction completed on 31 December 2014, creating Walgreens Boots Alliance. Alliance Boots therefore ceased to exist as an independent corporate group, while Boots and Alliance Healthcare continued as major businesses within the new company. At the end of its independent existence, the group reported operations in more than 27 countries, employed more than 120,000 people and operated over 4,600 retail stores, most with pharmacies. Its wholesale division served more than 180,000 healthcare delivery points through a large international distribution network. The group also developed private-label and international consumer brands and maintained BCM, a contract manufacturing business producing medicines and cosmetics for its own businesses and external customers.

Alliance Boots originated in the consolidation of two established pharmacy businesses. Boots Group was the British high-street pharmacy and health-and-beauty retailer, while Alliance UniChem operated a broad European pharmacy retail and pharmaceutical wholesale network. In October 2005 the companies announced a merger intended to combine complementary retail and distribution capabilities. The proposed transaction attracted competition scrutiny and opposition from Celesio, the owner of Lloyds Pharmacy, but the challenge did not prevent completion. The Office of Fair Trading granted final approval in February 2006, subject to the disposal of 96 stores. The merger was completed on 1 August 2006, with former Boots shareholders holding a slightly larger share of the combined company than former Alliance UniChem shareholders. The newly formed Alliance Boots plc operated as a London-listed group. Its strategy rested on two principal activities: pharmacy-led health and beauty retailing and pharmaceutical wholesaling and distribution. Boots UK formed the core retail operation, with stores selling prescription and over-the-counter medicines, cosmetics, personal-care goods and wellness products. Many larger branches also provided optical services, vaccination, screening, smoking-cessation support and other health-related services. Alliance Healthcare supplied medicines and healthcare products to pharmacies, medical practices, hospitals and health centres, giving the group a substantial position in the pharmaceutical supply chain. In April 2007, Alliance Boots received a buyout approach from KKR together with Stefano Pessina, then the company's executive deputy chairman. The transaction, estimated at approximately £12.4 billion, was completed through AB Acquisitions Limited and involved extensive bank financing. It was notable as the first takeover of a FTSE 100 company by a private-equity firm. Alliance Boots became privately held, and a Swiss group structure was developed in 2008. The company continued to operate substantial British businesses, especially Boots UK and Alliance Healthcare Distribution, but the location of its corporate headquarters became politically controversial. The Swiss headquarters prompted criticism from UK campaign groups and commentators who argued that the move was motivated partly by tax considerations. Protests took place at Boots stores in 2011. Later commentary also questioned the group's use of acquisition debt, profit allocation and corporate restructuring. Alliance Boots rejected the characterization that it had ceased to be a British business and emphasized its UK operations and tax registrations. These disputes became part of the wider public debate about private-equity ownership, corporate taxation and the use of international holding structures. Walgreens and Alliance Boots began a strategic combination in 2012. Walgreens purchased 45 percent of Alliance Boots and received an option to acquire the remainder within three years. The companies created Walgreens Boots Alliance Development Company to support integration, and Boots brands began appearing in Walgreens locations. In August 2014 Walgreens exercised the option for the remaining shares. Walgreens shareholders approved the transaction in December, and the merger completed on 31 December 2014. The new Walgreens Boots Alliance holding company placed Walgreens, Boots, pharmaceutical wholesale and international retail into separate divisions. Alliance Boots consequently ceased to operate as an independent group, although its principal operating brands continued within Walgreens Boots Alliance.

1. 2014Walgreens Boots Alliance is created

   Walgreens acquired the remaining interest and completed the combination on 31 December.

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2. 2012Walgreens acquires 45 percent

   Walgreens purchased a minority stake and entered a staged plan to combine the two pharmacy groups.

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3. 2008Swiss group structure established

   Alliance Boots GmbH was established in Switzerland as part of the post-buyout corporate structure.

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4. 2007Private-equity buyout

   AB Acquisitions Limited, led by Stefano Pessina and KKR, acquired Alliance Boots and took it private.

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5. 2006Alliance Boots is formed

   The merger completed on 1 August after competition review and the sale of 96 stores required by regulators.

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6. 2005Merger proposal announced

   Boots Group and Alliance UniChem announced plans to merge in a transaction intended to combine British pharmacy retail with European pharmaceutical distribution.

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A pharmacy-led health and beauty group combining consumer retail, professional pharmacy services, pharmaceutical wholesaling and proprietary health and beauty brands.

• Boots UKPharmacy-led health and beauty retail

  The group's principal British retail business operated pharmacies in high-street, city-centre and community locations. Stores sold prescription medicines, over-the-counter treatments, cosmetics, personal-care products and wellness goods. Larger branches offered services such as prescription dispensing, vaccinations, health screening, smoking-cessation support, optical care and selected private clinical services.

• Alliance HealthcarePharmaceutical wholesale and distribution

  Alliance Healthcare was the group's wholesale and distribution arm. It supplied medicines, healthcare products and related services to pharmacies, doctors, hospitals and health centres. Its network operated across multiple countries and supported frequent deliveries to a large number of healthcare delivery points.

• No7Skincare and beauty

  No7 was one of Boots' best-known beauty brands, focused particularly on skincare and cosmetics. During the Walgreens integration it was selected as an early Boots brand for introduction into the United States, beginning with a Walgreens store in Los Angeles in 2012.

• AlmusGeneric medicines2003

  Almus was a generic-medicines brand associated with Alliance Healthcare. Its packaging emphasized clear product identification and dosage information to help reduce dispensing and patient-use errors. The portfolio covered human and veterinary medicines.

• BCMContract manufacturing

  BCM was Alliance Boots' contract manufacturing business. It produced medicines and cosmetic products for Alliance Boots brands and third parties, including products associated with No7, Soltan and Botanics. Its facilities extended across the United Kingdom and continental Europe.

• Boots OpticiansOptical retail and services

  Boots Opticians operated within selected Boots locations, providing eye examinations and selling spectacles and contact lenses alongside the group's pharmacy and health-and-beauty offer.

• 2012Boots No7 United States introduction

  United States

  Alliance Boots used No7 as an early product bridge between Boots and Walgreens, placing the skincare brand in a Walgreens store in Los Angeles before broader international rollout.

  Outcome. The launch provided a visible test of Boots brand distribution in Walgreens locations during the staged merger process.

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• 2014Complete merger with WalgreensM&A

  The staged combination plan gave Walgreens an option to acquire the remaining Alliance Boots shares.

  What changed. Walgreens exercised the option in August, obtained shareholder and regulatory approvals, and completed the transaction on 31 December.

  Aftermath. Walgreens Boots Alliance was formed, and Alliance Boots ceased to exist as an independent group.

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• 2012Begin staged Walgreens combinationM&A

  Walgreens sought international scale and a broader pharmacy-led health and beauty platform.

  What changed. Walgreens bought 45 percent of Alliance Boots and received an option to purchase the remaining interest within three years.

  Aftermath. The companies coordinated integration through Walgreens Boots Alliance Development Company and began cross-distributing selected brands.

  Consideration for 45 percent stake. Approximately $6.7 billion (2012)

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• 2007Take Alliance Boots privateM&A

  The company became the target of a buyout led by Stefano Pessina and KKR.

  What changed. AB Acquisitions Limited acquired the company in a heavily financed transaction and removed it from public trading.

  Aftermath. The group adopted a private ownership structure and established a Swiss corporate headquarters the following year.

  Estimated transaction value. Approximately £12.4 billion (2007)

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• 2006Merge Boots Group with Alliance UniChemM&A

  Boots and Alliance UniChem sought to combine pharmacy retail, healthcare services and pharmaceutical distribution across Europe.

  What changed. The companies completed their merger on 1 August after regulatory review and the disposal of 96 stores.

  Aftermath. Alliance Boots became a major integrated pharmacy-led retail and wholesale group.

  • Celesio — Celesio challenged the transaction, but its opposition was rejected.
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• 2011Swiss headquarters and tax-avoidance controversyControversy

  Campaigners and commentators questioned whether Alliance Boots established its Swiss headquarters and used its post-buyout financing and corporate structure partly to reduce its UK tax exposure. Protests were held at Boots stores, and later reports disputed whether the listed Swiss headquarters represented a substantial operating presence. The company said its Swiss structure reflected its international character and defended its UK business and tax status.

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• 2014Walgreens completes acquisition of Alliance Boots

  Walgreens exercised its option to acquire the remaining interest, and the combination completed on 31 December to form Walgreens Boots Alliance.

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• 2012Walgreens buys a minority stake in Alliance Boots

  Walgreens paid approximately $6.7 billion for a 45 percent interest as the first stage of a planned combination of the two groups.

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• 2012Boots No7 launches in a Walgreens store

  The No7 skincare brand became one of the first visible examples of commercial integration between Boots and Walgreens when it entered a Walgreens location in Los Angeles.

  Product launchM&A
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• 2008Alliance Boots establishes Swiss corporate headquarters

  The group created Alliance Boots GmbH in Switzerland after the privatization, while maintaining major operating locations in the United Kingdom.

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• 2007Alliance Boots is acquired by Stefano Pessina and KKR

  AB Acquisitions Limited agreed to buy Alliance Boots in a transaction valued at approximately £12.4 billion, taking the company private.

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• 2006Alliance Boots merger receives final approval

  Regulatory approval was granted after competition concerns were addressed, including the sale of 96 stores, and the merger completed on 1 August.

  M&ARegulation
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• 2005Boots Group and Alliance UniChem announce merger

  The proposed combination was announced after speculation about a merger between the British pharmacy retailer and the European pharmacy group.

  M&A
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1. Alliance Boots