Walgreens Boots Alliance (US)

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Walgreens is America's largest drugstore chain by revenues, and also now the leader by store outlets, as a result of a series of regional acquisitions, including the famous Duane Reade drugstore chain in New York, added in 2010. (Competitor CVS Health is bigger by total revenues because of its large pharmacy benefits management division). Walgreens has come to position itself as the "front line" for the delivery of healthcare services in the US, with an expanding networking of in-pharmacy and worksite healthcare clinics, offering diagnosis and treatment for minor ailments. However it also sells a broad range of non-healthcare products, giving it a growing presence in the convenience store segment. In 2012, the group made a big jump into Europe, agreeing to acquire an initial 45% stake in local retailer and wholesaler Alliance Boots. It bought out the remaining shares slightly earlier than expected, at the very end of 2014. A year later, the group unveiled a $17.2bn bid for US rival Rite Aid that would consolidate Walgreens as the dominant drugstore chain in the US. However, that deal was abandoned 18 months later after protracted and fruitless negotiations with regulators.

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Recent stories from Adbrands Update:

Adbrands Weekly Update 22nd Nov 2018: Pharmacy giant Walgreens Boots Alliance is in talks to establish a strategic partnership with the US health insurer Humana that is likely to involve an equity swap and the roll-out of further primary care clinics in Walgreens outlets. Humana-operated clinics began testing in two Walgreens stores in Kansas City earlier this year. The talks are a response to moves by Amazon into pharmacy services, and the similarly defensive proposed takeover by Walgreens' rival CVS of Aetna.

Adbrands Weekly Update 21st Jun 2018: After more than a century as one of America's most admired companies, and for the several years in the early 2000s the single biggest by value, General Electric will be ejected from the Dow Jones Industrial Average next week and replaced by Walgreens Boots Alliance. GE still has a higher market cap than Walgreens, but its flagging performance and steep downward curve persuaded the the compilers of the index at S&P Dow Jones Indices that it was no longer sufficiently representative of the state of the US economy and of the stock market. It's a purely symbolic blow to GE but no more damaging than that. Most market-watchers reacted with bemusement, especially to the selection of Walgreens as GE's replacement. Although it increases the DJIA's weighting towards consumer staples, a traditional bricks and mortar retailer is hardly symbolic of the current state of the market compared to, for example, Amazon, or Facebook or Google parent Alphabet.

Adbrands Weekly Update 15th Feb 2018: In another dramatic move towards consolidation in the US healthcare industry, Walgreens Boots Alliance was revealed to have made an approach to acquire drug distributor AmerisourceBergen, in which it already holds a 26% stake. Any such deal would be worth in excess of $20bn. However, it would make considerable sense for Walgreens, which is already Amerisource's biggest customer, accounting for around 30% of its revenues.

Adbrands Weekly Update 6th Jul 2017: Walgreens cancelled plans for a full takeover of rival pharmacy Rite-Aid after a year and a half of protracted negotiations with competition regulators. The decision followed feedback from the FTC that clearance was not likely to be forthcoming, despite Walgreens' offer to sell on around a third of the smaller chain's outlets to another competitor, Fred's. Instead, Walgreens now proposes an arm's length acquisition of just under half of Rite-Aid's outlets - or around 2,200 stores - for $5.2bn. The remaining stores will continue to operate under the Rite-Aid banner as an independent company, with a reduced footprint of just 2,340 outlets, compared to almost 9,700 for CVS and a total of 10,300 in the US for the enlarged Walgreens. Fourth-ranked Fred's currently has just 600 stores unless it pursues a merger of its own with the slimmed down Rite-Aid. However, there is no guarantee that the new offer will appease regulators either.

Adbrands Weekly Update 2nd Feb 2017: In account assignments, WPP snatched the biggest creative account win of the year to-date with the capture of consolidated marketing services and media for Walgreens Boots Alliance in both the US and UK as well as other global markets. Combined billings are estimated at around $600m annually. WPP will assemble a new dedicated unit to handle the business under the banner Team WBA. It has yet to offer more details of which agencies will be involved, but the new entity is expected to handle all services from creative and digital to media, PR and promotions. The main losers are Omnicom's OMD and GSD&M, and independent Mother, but Publicis Groupe agencies also held a share of digital and promotional duties. WPP, on the other hand, was largely unrepresented on Walgreens' previous roster, so the appointment marks a fresh start for the pharmacy giant.

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