Allen & Overy wins spot among US firms on Walgreen’s £5.6bn buyout of Boots

Allen & Overy has won a spot alongside a raft of US giants to advise on Walgreen’s £5.6bn acquisition of its remaining stake in Alliance Boots.

US drugstore chain Walgreens is set to buy the 55 per cent stake in Swiss-owned Alliance Boots that it does not already own for $13.5bn in cash and stock. The deal follows the retail giant’s acquisition of a 45 per cent stake in Alliance Boots in 2012 for $6.7bn. 

Wachtell Lipton Rosen & Katz and Allen & Overy advised Walgreens on the transaction. Allen & Overy’s team was led by Amsterdam-based corporate partner Justin Steer, with assistance from antitrust partner Paul Glazener and corporate senior associate Emily Baker.

Gibson Dunn & Crutcher represented the financial adviser to Walgreens, Lazard. The firm fielded a team including New York-based corporate partners Eduardo Gallardo and Dennis Friedman, alongside corporate associate Saee Muzumdar.

Meanwhile, Simpson Thacher & Bartlett advised Alliance Boots’ owner KKR, led by New York-based M&A partner Mark Pflug.

Contrary to speculation, the deal will see the combined business remain headquartered in Chicago, rather than shifting to Alliance Boots’ tax domicile in Switzerland. It was previously reported that Walgreens was hoping to shift its headquarters to Europe, in a controversial inversion deal which would reduce the company’s tax bill.

Pharma giant AbbVie’s recent £31bn takeover of UK firm Shire fell into this category (10 June 2014), and Pfizer’s failed £62bn bid for AstraZeneca also would have involved relocating its headquarters for tax purposes (28 April 2014).

The deal, which will create a new company named Walgreens Boots Alliance, is expected to complete in the first quarter of 2015.

Background to this deal:

The man who created Alliance Boots, Stefano Pessina, and private equity giant KKR took the business private in 2007. They paid a total of £12bn for the company, making the transaction the biggest leveraged buy-out in Europe.

KKR turned to Simpson Thacher for advice on the deal, with Mark Pflug leading its team from New York.

Years later, in 2012, US drugstore giant Walgreens bought a 45 per cent stake in Alliance Boots, retaining an option to buy the remaining shares in three years’ time. The window to exercise this option runs for six months from February 2015. 

Allen & Overy and Wachtell took the lead roles for Walgreens on the 45 per cent buyout, while Simpson Thacher took a key advisory role for Alliance Boots.