British drug giants unveil $14.3 billion merger plan

LONDON— British drugstore chains Boots Group PLC and Alliance UniChem PLC announced a £7 billion merger yesterday that will give the combined company a stronger European presence as it competes with supermarket chains. The deal is valued at about $ 14.3 billion ( Canadian). The new company, to be called Alliance Boots, will have combined annual sales of £ 13 billion pounds, 2,600 stores in Britain and 300 stores in continental Europe. The value of the merger reflects the combined market capitalization of Boots — some £4 billion — and Alliance — about £3 billion.

Boots and Alliance said the “ merger of equals” would provide a platform for the Boots brand to expand abroad and generate at least £100 million of savings within four years, partly through job cuts of about 1,000. The combined companies employ around 100,000 people.

Boots, which began trading in 1849, has seen sales at its 1,400 pharmacies in Britain fall in recent years as supermarkets have aggressively targeted the toiletries and over- the- counter medicines markets.

Alliance UniChem has grown steadily through acquisitions to become the third- largest pharmacy chain in Europe, operating 1,200 pharmacies in Britain, Norway, Italy, Switzerland and the Netherlands.

“ This merger provides both businesses with a unique opportunity to combine their respective strengths to create an international force in pharmacy retailing and distribution,” Boots chairman Nigel Rudd said. The companies said Rudd and Boots chief executive Richard Baker would continue to hold their titles in the new company. Alliance UniChem executive deputy chairman Stefano Pessina also would keep his title. The combined group’s wholesale and distribution network will serve over 88,000 stores in 11 European countries. A key advantage of the deal was the chance to expand the Boots brand in Continental Europe with the aim of generating half of its profits overseas by 2010, Alliance UniChem executive deputy chairman Stefano Pessina said.

“ We expect Alliance Boots to be a very acquisitive company,’’ Pessina said.

SERGIO DIONISIO/ AP People walk past a Boots pharmacy on Oxford Street in central London yesterday. Alliance UniChem PLC and Boots PLC plan to join forces to become Alliance Boots.