US advisers take the lead on £5.6bn takeover of UK institution
The Walgreen Company has instructed New York law firm Wachtell, Lipton, Rosen & Katz and Allen & Overy (A&O) to handle its acquisition of the remaining 55% of Nottingham-based chemist Alliance Boots in a £5.6bn deal.
The pharmacy giant already has a 45% stake in the group, which owns UK high-street favourite Boots, which it acquired in August 2012. This new deal will create the combined entity of Walgreens Boots Alliance, with more than 11,000 stores in ten countries and a portfolio of retail and business brands.
The transaction, which is expected to close in the first quarter of 2015, will also establish the world’s largest pharmaceutical wholesale and distribution network delivering to pharmacies, doctors, health centres and hospitals in 20 countries.
The A&O team that advised Walgreens on the deal was led by Amsterdam-based corporate partner Justin Steer, alongside the office’s head of competition Paul Glazener, while corporate partners Andrew Brownstein and Benjamin Roth led for Wachtell.
Investment banks Goldman Sachs and Lazard acted as financial advisers on the transaction, with Gibson, Dunn & Crutcher’s New York corporate partners Eduardo Gallardo and Dennis Friedman advising Lazard on its role.
Meanwhile, Simpson Thacher & Bartlett advised Alliance Boots’ owner, private equity firm Kohlberg Kravis Roberts (KKR), led by New York-based M&A partner Mark Pflug.
The deal underlines the inroads US advisers have made in the UK legal market, with Simpson Thacher having expanded its City operation in large part to handle KKR, long one of the New York law firm’s most active clients. Clifford Chance, another KKR regular, had acted alongside Simpson Thacher when Walgreens purchased its minority stake in 2012 but was not involved in the latest deal.
In a critical political environment, Walgreens decided against using an inversion strategy which would have relocated its headquarters overseas and cut its tax liability.
The new combined entity will remain in Illinois where the tax rate is 37.5% compared with the much lower rate of 20% in Alliance Boots’ tax domicile in Berne, Switzerland.
tom.moore@legalease.co.uk