Walgreen Is Said to Near a Deal to Buy Out British Drugstore Chain – but ...
Walgreen is near a deal to fully take over the British pharmacy retailer Alliance Boots - but will do so without moving its corporate headquarters abroad.
The American retailer is closing in on a deal to buy the 55 percent of Alliance Boots that it does not already own, a person briefed on the matter said on Tuesday. But the transaction, which could be announced as soon as Wednesday, will not include a move to relocate Walgreen 's corporate citizenship to a lower-tax country.
Such a move, known as an inversion, would have required renegotiating the existing deal agreement with Alliance Boots, something the British retailer was unwilling to accommodate, this person said.
Inversions have grown in frequency as more and more American companies weigh switching their corporate headquarters to reduce their tax rates. They take advantage of clauses within the United States' tax code that allow corporations, under certain circumstances, merge with a foreign counterpart and relocate their headquarters.
That would let such companies escape tax rules requiring American corporations to pay taxes on profits earned overseas. (They would still pay taxes on profits earned in the United States.)
Inversions have increasingly moved into the crosshairs of the White House and lawmakers in Washington, both of whom have declared the tactic as unpatriotic tax dodging. Treasury Secretary Jacob J. Lew said on Tuesday that the Obama administration was considering ways to halt the practice without having to pass new legislation.
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Companies and deal makers have defended inversions as perfectly legal and the consequence of the United States' complicated tax code. Not taking advantage of the maneuver, they say, leaves American corporations at a disadvantage to foreign competitors who enjoy lower tax rates.
Investors, including a number of high-profile hedge funds, have pressured Walgreen for months to consider changing its corporate home to reduce its tax bill. At least one other shareholder has opposed such a move, however.
Walgreen's chief executive, Greg Wasson, acknowledged in June that the company was studying the possibility of a move.
Shares in Walgreen fell more than 4 percent on Tuesday afternoon after Sky News of Britain reported that the company would not be undertaking an inversion.
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