Walgreens to buy up Alliance Boots

The board of Walgreens will now seek shareholder approval for the £9bn deal to go through.

Walgreens bought a 45% stake in the company in 2012, and now wants to buy the remaining 55% stake.

The firm said it would not use the deal to alter its current tax structure, and expects the merged company to be based in Chicago.

"We are excited to move forward with the next important step in becoming a new kind of global health care leader," said Walgreens chief executive Greg Wasson.

Walgreens said it would invest "across core businesses at suitable returns to drive organic growth". 

However, it will also look to make cost reductions of $1bn over three years at "corporate, field and store-level".

The new combined company will be called "Walgreen Boots Alliance", and its headquarters will be in the Chicago area, Walgreens said.

Boots will remain at its UK headquarters in Nottingham.

Mr Wasson will become chief executive of the new company, and Stefano Pessina, who is currently executive chairman of Alliance Boots, will report to Mr Wasson.

Tax plan ditched

Walgreens said it had thoroughly evaluated moving its headquarters abroad for tax purposes, but that the move would not have been feasible under current US tax rules.

A move would have put it at too much risk from scrutiny by the US tax authority, the Internal Revenue Service (IRS), the company said.

"We took into account all factors, including that we could not arrive at a structure that provided the company and our board with the requisite level of confidence that a transaction of this significance would need to withstand extensive IRS review and scrutiny," Mr Wasson said.

In addition, public opinion may have been against a move for tax purposes, the company added.

In May, pharmaceutical company Pfizer dropped a bid for UK company AstraZeneca following an outcry that it was partly motivated by a wish to buy the firm for tax reasons.

Being domiciled abroad is attractive for US companies because of the relatively high rate of US corporation tax compared with other countries.