Alliance Boots

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Alliance Boots GmbH
Type Private
Industry Pharmaceuticals
Retailing
Founded 2006 (Alliance Boots)
1849 (Boots)
1997 (Alliance Unichem)
Headquarters Zug, Switzerland
(Registered office)
Nottingham, United Kingdom
Weybridge, United Kingdom
(Operational headquarters)
Area served Global
Key people Stefano Pessina (Executive Chairman)
Products Boots
No7 - skincare and cosmetics
Soltan - Suncare
drug store/pharmacy, other specialty
Revenue £22.4 billion (2012/13)[1]
Owner(s) Kohlberg Kravis Roberts, Stefano Pessina, Walgreens
Employees 108,500 (2012/13)[1]
Parent AB Acquisitions Holdings Limited
Subsidiaries Boots UK
Boots Opticians
Guangzhou Pharmaceuticals (50%)
Website www.allianceboots.com

Alliance Boots GmbH is a multinational pharmacy-led health and beauty group. It has two core business activities - pharmacy-led health and beauty retailing, and pharmaceutical wholesaling and distribution - and has a presence in over 25 countries including associates and joint ventures. It has revenue in excess of £22.4 billion[1] The company was formed by the merger of the British high street pharmacist Boots Group and the pan-European wholesale and retail pharmacy group Alliance UniChem in 2006.

Alliance Boots was initially a British plc listed on the London Stock Exchange. In 2007 it was bought out in a private equity transaction, and in 2008 the trading business was transferred to a Swiss GmbH, which is a wholly owned subsidiary of a British company, AB Acquisitions Holdings. AB Acquisitions Holdings is owned by the private equity firm Kohlberg Kravis Roberts (KKR) and the Italian businessman Stefano Pessina, who built Alliance UniChem and is now the executive chairman of Alliance Boots. In 2012, the American retailer Walgreens purchased a 45% stake in the business, as part of a three-year merger plan.

The group's operations are mainly carried out under the Boots and Alliance Healthcare brands. Boots UK is the UK's leading pharmacy-led health and beauty retailer. Alliance Boots is also the largest pharmaceutical wholesaler in the UK through its Alliance Healthcare (Distribution) Ltd business.

Alliance Boots employs over 108,000 staff and operates more than 3,100 retail stores, of which just over 3,000 have pharmacies. Alliance Boots pharmaceutical wholesale division serves over 170,000 pharmacies, doctors, hospitals and health centres from over 370 distribution centres in 20 countries.[1]

History[edit]

Establishment[edit]

Following a short period of speculation amongst financial analysts, it was announced in October 2005 that Boots Group would merge with Alliance UniChem in a deal valuing both companies equally and said to be worth around £7 billion.[2] Rival firm Celesio, owner of the Lloyds Pharmacy chain, challenged the deal, although were rejected by the Competition Appeal Tribunal. The merger received final approval from the Office of Fair Trading in February 2006 and completed on 31 March 2006, although 96 shops were sold to comply with a condition laid down by the OFT. Former Boots Group shareholders held 50.2% of the new company, with former Alliance UniChem shareholders owning 49.8%.[3]

Acquisition by Stefano Pessina & KKR[edit]

On 25 April 2007, Alliance Boots was approached with a buy-out offer by New York City-based Private Equity firm Kohlberg Kravis Roberts in conjunction with Alliance Boots' then Executive Deputy Chairman, Stefano Pessina, for an estimated £12.4 billion.[4] Alliance Boots was the first company on the FTSE 100 share index to be bought-out by a private equity firm. Almost £9 billion was advanced by investment banks, including Deutsche Bank, Citigroup, J.P. Morgan, UniCredit, Barclays, Merrill Lynch, the Bank of America and the Royal Bank of Scotland. Simultaneously the banks, as so-called "equity underwriters“, together invested around £1.4 billion in the buyout company. The reverse takeover and subsequent privatisation was dubbed as "the best deal ever struck" by a managing partner at a private equity firm in June 2008.[5]

On 31 March 2008 Alliance Boots GmbH, of Zug, Switzerland, acquired the trading business from AB Acquisitions Holdings Limited (KKR and Pessina's acquistition vehicle) in exchange for the issue of share capital, and became a subsidiary of that company.

Walgreens stake purchase[edit]

It was announced on 19 June 2012 that Walgreens would purchase a 45% stake in Alliance Boots, as the first step in a three-year merger plan. Walgreens paid $6.7 billion for the share, and will pay a further $9.5 billion to take full control of Alliance Boots and create the world's largest health and beauty retail group with over 11,000 stores worldwide.[6]

The two companies established Walgreens Boots Alliance Development Company in late 2012 to further their integration. Both companies are due to be combined by 2015.[7]

Operations[edit]

Alliance Boots operations are split into three areas, Health and Beauty Retail, Pharmaceutical Wholesale, and Contract Manufacturing.

Health and Beauty Retail[edit]

Boots UK[edit]

Interior of a Boots store

Boots UK forms the backbone of Alliance Boots retail operations in the United Kingdom. All former Alliance Pharmacy stores have been rebranded as Boots. The Boots brand has a history stretching back over 160 years and is a familiar sight on Britain's high streets.

Boots outlets are located in prominent high street/city centre locations as well as in local communities. Most branches have a pharmacy[1][not in citation given] and focus on healthcare, personal care and cosmetic products, with most stores selling over the counter medicines. Many stores also feature traditional photo processing and/or a Kodak picture kiosk where users of digital cameras and camera phones can create prints. Larger stores usually offer a range of electrical equipment such as hairdryers, curlers and foot massagers, whilst selected stores offer a range of sandwiches, baguettes, wraps, salads and beverages.

Larger stores typically offer a variety of healthcare services in addition to dispensing prescriptions, such as flu vaccination, cholesterol screening, weight loss advice, hair retention treatment, smoking cessation advice and products, and chlamydia testing & treatment (private service). Optician services are also offered in many larger stores, with Boots Opticians providing eye tests along with the sale of spectacles and contact lenses.

Boots has a website, www.boots.com, for online shopping in the United Kingdom.[8]

The company's loyalty card, branded the Boots Advantage Card, claims 17.8 million regular users.[9] Users earn 4 points (worth 1p each) for every £1 spent. In Ireland, users earn 4c for every €1 spent.

Internationally[edit]

Since 1936, there have been Boots stores outside the UK. Stores in countries as widely spread as New Zealand, Canada (see Pharma Plus) and France were all closed in the 1980s. A new roll-out started in 1997 with the Netherlands, Thailand, Taiwan and Japan but only Thailand survives, as an independent chain.

Much of the Irish chain was acquired by purchasing Hayes Conyngham Robinson in 1998,[10] although Boots had been present in Ireland prior to this. It now has 61 stores in the Republic. In July 2011, an investigation by Ireland's National Consumer Agency found Boots to be the most expensive pharmacy for prescription drugs.[11]

In 2008, Boots started opening pharmacies in Norway. Now they have about 120 outlets known as Boots Apotek. (The name means Boots Pharmacy.)

In other countries (including Kuwait, Hong Kong, Switzerland and the USA), Boots products are sold from instore 'implants' in department stores and other pharmacies. A new store has also opened in Dubai, United Arab Emirates and in Qatar.

In Europe, Alliance Boots claims to be the clear market leader in pharmacy with stores in the UK, Norway, the Republic of Ireland, The Netherlands, Italy and Russia. It also has pharmacies in Thailand and its associates and joint ventures operate pharmacies in Switzerland, China, Lithuania and Italy.[12]

Wholesale[edit]

Alliance Healthcare[edit]

Alliance Healthcare is the backbone of Alliance Boots wholesale and distribution service, with twice daily deliveries to around 5,700 pharmacy shops in the UK alone. Internationally, Alliance Healthcare supplies medicines, other healthcare products and related services to over 170,000 pharmacies, doctors, health centres and hospitals from over 370 distribution centres in 21 countries.[12]

In addition to the wholesale of medicines and other healthcare products, Alliance Healthcare provides services to pharmaceutical manufacturers who are increasingly changing and adapting their approaches to distribution, while at the same time outsourcing non-core activities. These services include pre-wholesale and contract logistics, direct deliveries to pharmacies, and specialised medicine delivery including related home healthcare.

In recent years it has entered the fast growing Russian and Chinese markets.

Almus[edit]

Almus is a brand of generic prescription drugs sold in five countries.

Almus is an umbrella brand for the wide range of lower cost generic medicines, which was initially launched in the UK in 2003. Alliance Boots has placed considerable emphasis on the design of the packaging in an attempt to reduce the number errors by the dispensing chemist and by the patient relating to incorrect dosage which can result in either a dangerous accidental overdose or an equally dangerous under dose. Almus has won numerous awards for the design of their packaging and documentation.[13]

Contract manufacturing[edit]

BCM Limited is the manufacturing subsidiary of Alliance Boots and manufactures a range of own-brand and third-party medicines, and cosmetic product ranges such as No 7, Kangol, Toni & Guy, FCUK, Soltan and Botanics. Some are sold through Boots stores whilst others are sold through third party stores such as French Connection and Toni & Guy. BCM has facilities in the UK, Germany, France and Poland.

BCM Specials manufactures bespoke non-licensed medicines for UK hospital and retail pharmacies.

Product brands[edit]

The Boots own brand range of products includes skincare, medicines, healthcare products and many more.

No7 was launched in 1935: it continues to launch products.

Soltan is one of the UK's biggest selling suncare ranges and is also available in France, Italy, Spain and Portugal.

Botanics was first launched in the UK in 1995. It is a range of skin, hair, bath and body products.

Boots Laboratories Serum7 anti-ageing skincare range for independent pharmacy customers was successfully launched in France and Portugal in 2008/09. The Boots Laboratories skincare range will be launched in Spain and Italy in summer 2010, the latter in partnership with Procter & Gamble.

Subsidiary companies[edit]

Alliance Boots subsidiaries include:

Controversies[edit]

Alliance Boots has been accused of locating its headquarters in Switzerland solely to reduce its tax liabilities in the United Kingdom. In January 2011 protests were held at a number of Boots stores, including its flagship London store, which was closed down by protestors. The protest group UK Uncut claimed that Alliance Boots' Switzerland headquarters consists only of a post office box and that its relocation has reduced its annual tax liability by £86 million. Alliance Boots said that its new headquarters will better reflect the international nature of its wider group.[14]

References[edit]

  1. ^ a b c d e [1], allianceboots.com.
  2. ^ "Alliance and Boots: a tale of two chemists". BBC News Online. 3 October 2005. Retrieved 9 November 2012. 
  3. ^ Alliance Boots IR
  4. ^ "Terra Firma drops Boots bid plan". BBC News Online. 24 April 2007. Retrieved 9 November 2012. 
  5. ^ Lewis, Toby; Craig, Catherine (23 Jun 2008). "Alliance Boots thrives thanks to KKR medicine". Financial News. Retrieved 20 February 2012. "One managing partner at a rival private equity firm described Pessina’s de facto reverse takeover [...] and subsequent privatisation as the best deal ever struck." 
  6. ^ Harry Wallop (19 June 2012). "Alliance Boots sells 45pc stake to Walgreens". The Telegraph. Retrieved 28 May 2013. 
  7. ^ Japsen, Bruce (14 August 2013). "CEOs Cross The Pond As Walgreen And Alliance Boots Get Closer". Forbes. Retrieved 2 October 2013. 
  8. ^ Country selection page at Boots online shopping site.
  9. ^ "Annual Report 2011/12". Alliance Boots. 2012. p. 22. Retrieved 8 November 2012. 
  10. ^ Pharmacists join the ranks of millionaires
  11. ^ "Chain to review drug charges as huge price gaps uncovered". Irish Independent. 9 July 2011. 
  12. ^ a b Annual report for 2009/10, allianceboots.com.
  13. ^ Almus Media Centre
  14. ^ Tax exemption protest at Boots - London

See also[edit]

External links[edit]