Walgreens announced its plan yesterday to buy the remaining 55% of European pharmacy and beauty company Alliance Boots, Ltd., but the question hanging over the company’s head pertained to whether or not Walgreens would maintain its American-based headquarters or move to Europe in order to avoid the 35% US Corporate tax for corporations headquartered in the US.
After some time of deliberation, Walgreens has decided to maintain its Chicago headquarter base in the United States.
The decision was met with a “thumbs-down” today by Wall Street, as Walgreens’ stock dropped 14.1% on Wall Street today after acknowledging the $15.3 billion deal to acquire Alliance Boots, along with the decision to remain in Chicago.
Walgreens’s decision to remain in the US had much to do with remaining on good terms with the IRS, not being subject to “three to 10-year litigation,” maintaining its revenue from Medicare and Medicaid programs in the US, as well as the American public’s reaction to what has always been an American pharmaceutical retail company trading in its American nature for a European one.
Walgreens CEO Greg Wasson said in his speech to analysts that the company could not find a positive reason to abandon its Chicago base: “In the end, the parties could not arrive upon a structure that provided the level of confidence required by the (Walgreens) board to ensure that the transaction could withstand almost certain intense protracted IRS scrutiny.”