The sum of Walgreens Boots Alliance will be greater than its parts
Walgreens pulled the trigger on step two of its proposed Alliance Boots merger a full six months early. Once the deal is finalized, that will give Walgreens a headstart on fullfilling its promise of becoming the largest retail pharmacy operation, pharmaceutical distributor, prescription drug buyer and healthcare services provider and all with a global reach.
With the expected synergies derived from this merger, and the collective buying power of a still-growing pharmacy operation, the sum of the combined entity will be greater than its parts. You can expect that to translate into every facet of its business, boosting an already world-class retail pharmacy service offering as well as creating the kind of retail experience across the front-end that has shoppers coming back for more.
"With our full combination, Walgreens Boots Alliance will be well positioned for a new era of profitable growth," Greg Wasson, president and CEO of the merged enterprise, told analysts when making the announcement. "We are launching a new three-year 'Next Chapter' plan designed to maximize the scope and scale of the new combined company," he said. The plan will focus on three specific areas. "First, a differentiated retail experience that transforms the retail model for health and wellness and changes the way people shop for beauty products. Second, integrated pharmacy and healthcare that advances the role of pharmacists and provides access to innovative healthcare services. And third, global pharamceutical services that re-invent the pharmaceutical value chain and deliver a seamless specialty pharmacy model."
Walgreens Boots Alliance combines two leading companies with iconic brands that will create a pharmacy-led health and well-being retailer with more than 11,000 stores in 10 countries and a portfolio of retail and business brands, as well as increasingly global health and beauty product brands. The combined entity will employ 350,000 people, including more than 92,000 healthcare service providers.
The full combination also will establish the world’s largest pharmaceutical wholesale and distribution network with more than 370 distribution centers delivering to more than 180,000 pharmacies, doctors, health centers and hospitals in 20 countries.
The new pharmacy giant will benefit from the best executive talents from both sides of the Pond. Joining Walgreens Boots Alliance from overseas is Ornella Barra, president and chief executive global wholesale and international retail; Alex Gourlay, who joined Walgreens' U.S. operations prior to the full merger, is now EVP Walgreens Boots Alliance and president Walgreens; and Ken Murphy is now EVP and president global brands. Walgreens mainstays include Jeff Berkowitz, EVP and president of pharma and global market access; Tom Sabatino, EVP and global chief legal and administrative officer; Tim Theriault, EVP and global information officer; and Kathleen Wilson-Thompson, EVP and global chief human resources officer.
The newest member of the Walgreens executive team, Timothy McLevish, EVP and CFO, is expected to quickly come up to speed on the business of Walgreens Boots Alliance and help the company transition into the first global pharmacy-led, health and wellbeing enterprise. "Tim brings us extensive U.S. and global experience in finance and business strategy," Wasson said. "He's guided a number of successful mergers and acquisitions through the integration process, creating exceptional value for shareholders along the way. He also has a history of strong cost control and financial discipline, and this experience will be critical as we move forward."
Once the deal is done, Walgreens Boots Alliance has promised to generate even more of a buzz around its front-end than it already has. The combined reach of Walreens' and Boots' loyalty programs already command the attention of more than 100 million consumers worldwide. "I can assure you that after the merger, we will have a step up in the margins of the front of the store. You will start to see it growing from next year on. ... We have clear plans for it," promised Stefano Pessina, executive vice chairman Walgreens Boots Alliance.
Of all the decisions made on Aug. 6, the one that perhaps commanded the most media attention was Walgreens determination to keep its headquarters right where it is in the Chicago area. The decision not to pursue an inversion was given high praise by Illinois politicians. "They turned what could have been a negative into a very positive outcome," commented Sen. Dick Durbin, D-Ill. "Their decision today speaks volumes about their determination to be a strong business, good corporate citizen, and vital community neighbors," added Chicago mayor Rahm Emanuel.