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/Caremark 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 Weekly Update:

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.

Adbrands Weekly Update 27th Oct 2016: Walgreen Boots Alliance reported solid performance for the year to August, and cheered investors with confirmation that the acquisition of pharmacy chain Rite Aid is on track, but slightly delayed. The group is still in negotiation with regulators for the elimination of crossover stores from the Walgreens and Rite Aid portfolios. Analysts had feared that the regulatory process might derail the merger altogether, but Walgreens said that completion is now expected in 1Q 2017. Revenues for the last year rose 13% to $117.4bn. Comparable net earnings were impacted by exceptional gains in the prior year, dipping marginally to just under $4.2bn. However operating income excluding exceptionals jumped almost 30% to over $6.0bn.

Adbrands Weekly Update 16th Jun 2016: Simon Roberts, group EVP of pharmacy giant Walgreens Boots Alliance and local president of Boots in the UK, has resigned his role " to pursue new opportunities". The chain denied any connection to a Guardian newspaper investigation earlier this year. This alleged that Boots pharmacy managers had been encouraged to boost profits by offering medical health checks to customers who didn't need them (and even to other staff) in order to claim cash rebates from the National Health Service. Boots denied this was the case. Roberts' departure has prompted a full overhaul of group senior management, with EVPs Alex Gourlay and Ornella Barra elevated to co-COOs. Gourlay will continue to oversee the Walgreens and Boots chains, with Barra responsible for global wholesale and group corporate services. Boots' former marketing director Elizabeth Fagan was named as Roberts' effective successor, becoming managing director of Boots. Ken Murphy becomes EVP & group chief commercial officer.

Adbrands Weekly Update 29th Oct 2015: Pharmacy giant Walgreens Boots Alliance is to acquire competitor Rite Aid for $9.4bn, or $17.2bn including the smaller company's debt. Walgreens is already the biggest pharmacy chain in the US, with 8,200 outlets. It also controls the Boots pharmacy business in the UK and other markets, as well as an extensive wholesale business. Main US rival CVS Health has 7,800 stores but is significantly bigger by revenues - almost $140bn last year - as a result of its substantial Caremark prescription management division. The acquisition of Rite Aid's 4,600 drugstores in 31 US states creates a group with around 13,000 outlets (though some overlapping stores may be closed) and combined sales of close to $130bn. Separately, Walgreens Boots reported results for the year to August. Revenues soared 35% to $103.4bn as a result of the consolidation of Alliance Boots, while net earnings more than doubled to $4.2bn.

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