Walgreens Boots Alliance
| Walgreens Boots Alliance, Inc. | |
|---|---|
| Type | Private company (since 2025); formerly Nasdaq: WBA |
| Industry | Retail pharmacy, health care, beauty retail |
| Founded | 31 December 2014 |
| Headquarters | Deerfield, Illinois, United States |
| Area served | United States, United Kingdom, Ireland, Mexico, Chile, Thailand and others |
| Key people | Stefano Pessina (Executive Chairman) |
Walgreens Boots Alliance, Inc. is an American multinational holding company headquartered in Deerfield, Illinois. It is the parent of Walgreens, the second-largest retail pharmacy chain in the United States, and of Boots, the dominant pharmacy and health and beauty retailer in the United Kingdom. The group was formed on 31 December 2014 when Walgreens acquired the fifty-five per cent of Alliance Boots it did not already own, paying US$4.9 billion in cash together with about 144.3 million shares.
The company was listed on the Nasdaq under the symbol WBA and was a component of the S&P 500. On 26 June 2018 it replaced General Electric in the Dow Jones Industrial Average, an event widely reported as marking the displacement of American industrial manufacturing by consumer health retail. It was itself removed from the index on 26 February 2024, replaced by Amazon, a substitution that told a similarly clear story about where retail value had moved.
In 2025 the company was acquired by the private equity firm Sycamore Partners in partnership with Stefano Pessina, who had been the largest individual shareholder and executive chairman before the transaction. As part of the buyout the Boots business was separated into a distinct group, reversing the logic of the 2014 combination after a decade.
At its peak the company ranked eighteenth on the Fortune 500 list of American corporations by revenue, with sales of US$132.7 billion in the 2022 financial year and operations in nine countries.
History
Walgreens
Charles Rudolph Walgreen bought the Chicago drugstore where he worked in 1901 and opened a second in 1909. His innovations were in service and in manufacturing his own products to a consistent standard, in an era when the contents of a pharmacy preparation varied considerably from shop to shop. The chain grew to more than five hundred stores by 1930. A company legend, which the firm has neither confirmed nor seriously discouraged, credits an employee at a Walgreens soda fountain with the invention of the milkshake in 1922.
Growth through the twentieth century made Walgreens the largest drugstore chain in the United States for many years, a position it later contested with CVS Health. The company bought the New York chain Duane Reade in 2010 for about US$1.08 billion, acquiring a dense Manhattan presence.
Alliance Boots
Boots was founded in Nottingham in 1849 by John Boot as a herbalist shop and developed by his son Jesse Boot into a national chain selling proprietary medicines at prices ordinary people could afford. The Boots Pure Drug Company established its own research laboratories, which developed ibuprofen in the 1960s under Stewart Adams, one of the most widely used medicines in the world.
Alliance UniChem, a pharmaceutical wholesaler built by Stefano Pessina from a family wholesaling business in Naples, merged with Boots in 2006 to form Alliance Boots. The combined company was taken private in 2007 by Kohlberg Kravis Roberts and Pessina in what was then the largest leveraged buyout in European history, at about £11 billion. Walgreens bought forty-five per cent of Alliance Boots in 2012 with an option over the remainder, which it exercised in 2014.
The combined company, 2015 to 2023
The merger was presented as creating the first global pharmacy-led health and beauty enterprise, combining American retail scale with British brand strength and a large European pharmaceutical wholesaling business. The industrial logic rested on purchasing power in generic medicines, on exporting Boots own-brand products such as No7 into American stores, and on the wholesale division's relationships with manufacturers.
On 27 October 2015 Walgreens announced the purchase of the competing chain Rite Aid for US$17.2 billion. Antitrust objections forced successive reductions, first to a US$5.18 billion transaction for roughly half of Rite Aid's stores, and finally to a Federal Trade Commission approval on 19 September 2017 covering 1,932 stores for US$4.38 billion, completed in January 2018. The episode consumed more than two years of management attention and delivered a fraction of what had been intended.
In June 2021 the majority of the Alliance Healthcare wholesale division was sold to AmerisourceBergen for US$6.28 billion in cash, removing the wholesaling business that had been one of the merger's principal rationales.
The company then attempted to become a provider of medical care rather than only a dispenser of medicines, investing heavily in VillageMD, a primary care operator whose clinics were placed alongside pharmacies, and acquiring the home care provider CareCentrix and the specialty pharmacy Shields Health Solutions. The strategy followed CVS Health's purchase of the insurer Aetna and rested on the same reasoning: that a pharmacy chain competing with Amazon on convenience would lose, and that its defensible asset was physical proximity to patients. Rosalind Brewer, appointed chief executive in 2021 and one of the few Black women to lead a Fortune 500 company, directed this expansion. It did not work. VillageMD required write-downs of billions of dollars, clinics were closed and Brewer left in 2023.
Decline and the Sycamore buyout, 2024 to 2025
In June 2024 the company disclosed that only about seventy-five per cent of its 8,600 American locations were profitable and that it planned to close more than two thousand of them by 2027. The share price fell by more than fifty-five per cent between January and July of that year. In February 2024 it had already been removed from the Dow Jones Industrial Average.
The causes were several and mutually reinforcing. Prescription dispensing had become barely profitable, because pharmacy benefit managers set reimbursement rates and the three largest are owned by competitors or by insurers. The front of the store, which had historically subsidised the pharmacy counter through high-margin sales of cosmetics, snacks and household goods, lost customers to discounters and to online retail, and in several cities responded to theft by locking merchandise in cabinets, which reduced sales further. The dividend, maintained for decades, was cut sharply. Debt taken on for VillageMD and for the Rite Aid stores became difficult to service against falling cash flow.
In 2025 Sycamore Partners, together with Pessina, acquired the company and took it private in a transaction valuing it at roughly US$10 billion plus assumed debt, a fraction of the combined value of the businesses at the 2014 merger. The Boots operations were placed into a separate group, and the assumption behind the split is that the American and British businesses were always more valuable apart than together, which is what a decade of results had suggested.
Operations
Retail Pharmacy USA
Walgreens and Duane Reade operated within this division. Both sell prescription and non-prescription medicines alongside household items, personal care and beauty products, and offer photo services, health and wellness services and, in many locations, vaccination and basic clinical care. Walgreens has stores in all fifty states, the District of Columbia, Puerto Rico and the United States Virgin Islands.
Retail Pharmacy International
Boots formed the main part of this division. The brand's history stretches back more than 170 years in the United Kingdom and its stores occupy prominent high street and city centre positions as well as local neighbourhoods. Most branches include a pharmacy, and many offer photo processing, picture kiosks, small electrical goods and, in larger stores, food to take away. Boots has operated outside the United Kingdom since 1936; stores in New Zealand, Canada and France closed in the 1980s, and as of 2022 Boots-branded stores operated in Ireland, Norway and Thailand, with franchises in the Middle East and Indonesia. The division also included the pharmacy chains Benavides in Mexico and Farmacias Ahumada in Chile.
Product brands
Boots produces a large number of own brands, including No7, Soltan, Botanics, Boots Pharmaceuticals and Boots Laboratories. Launching these internationally through Walgreens stores was among the explicit purposes of the 2012 share purchase. No7 in particular achieved genuine success in the United States, and the brand's 2007 Protect and Perfect serum became a case study in what happens when a clinical trial broadcast on television creates demand a manufacturer cannot meet.
In 2015 the company paid £140 million for the British skincare brand Liz Earle Naturally Active, previously owned by Avon Products, adding one of the better-known names in British natural skincare to its portfolio.
Finances
For the 2020 financial year the company reported earnings of US$456 million on revenue of US$139.5 billion, an increase of 2.5 per cent over the previous year. In the 2022 financial year sales were US$132.7 billion, broadly flat, with net earnings of US$4.3 billion, and the company ranked eighteenth on the Fortune 500. Figures before 2014 relate to Walgreens alone.
The pattern across the decade is revealing: revenue remained very large and very stable while profit swung violently, reflecting a business in which the top line is dominated by prescription dispensing at regulated and declining margins, and the bottom line by write-downs of acquisitions and by the performance of the far smaller retail front end.
Assessment
The rise and fall of Walgreens Boots Alliance illustrates a structural problem rather than a management failure, though there was no shortage of the latter.
Retail pharmacy in the United States occupies an awkward position. It dispenses a product whose price it does not set, to customers whose insurers determine what will be paid, competing with mail order and with online retailers that carry none of the cost of a shop on a street corner. The reimbursement that funds dispensing is set by pharmacy benefit managers, the three largest of which belong to CVS Health, Cigna and UnitedHealth Group. Of those, one owns the competing chain. A business whose principal revenue is set by a competitor's subsidiary has a difficult position to defend.
The strategic responses attempted over the decade each had a logic and each failed. Wholesaling was sold. The Rite Aid acquisition was cut down by regulators to a fraction of its intended size. The move into primary care through VillageMD assumed that a pharmacy chain could learn to run medical clinics, an assumption that cost billions of dollars to disprove. Meanwhile CVS Health pursued the alternative of buying an insurer, an approach with its own difficulties but which at least placed the company on the side of the table that sets prices.
Boots, by contrast, was never the problem. It remained the leading health and beauty retailer in the United Kingdom throughout, with brands of genuine value and a position on the high street that survived the decline of much around it. Its difficulty was that it was owned by a company whose American troubles absorbed capital and attention, and whose leverage constrained investment. The separation of Boots in the 2025 buyout is the acknowledgement of this, and returns the business to something like its position before 2014.
What remains is a private company with a large estate of shops, a strong British brand, a diminished American chain closing a quarter of its locations, and an owner whose customary approach to retail assets is to separate what can be sold from what must be shrunk.
Timeline
- 1849 John Boot opens a herbalist shop in Nottingham.
- 1901 Charles Rudolph Walgreen buys the Chicago drugstore where he worked.
- 2006 Alliance UniChem merges with Boots to form Alliance Boots.
- 2007 Alliance Boots taken private by Kohlberg Kravis Roberts and Stefano Pessina for about £11 billion.
- 2010 Walgreens acquires Duane Reade for about US$1.08 billion.
- 2012 Walgreens buys forty-five per cent of Alliance Boots with an option over the rest.
- 2014 Option exercised; Walgreens Boots Alliance formed on 31 December.
- 2015 Rite Aid acquisition announced at US$17.2 billion; Liz Earle acquired for £140 million.
- 2017 Federal Trade Commission approves the purchase of 1,932 Rite Aid stores for US$4.38 billion.
- 2018 Rite Aid store acquisition completed in January; replaces General Electric in the Dow Jones Industrial Average on 26 June.
- 2021 Alliance Healthcare sold to AmerisourceBergen for US$6.28 billion; Rosalind Brewer appointed chief executive; VillageMD stake increased substantially.
- 2023 VillageMD write-downs; Brewer departs.
- 2024 Removed from the Dow Jones Industrial Average on 26 February; June disclosure that only 75 per cent of American stores are profitable and that more than 2,000 will close by 2027; shares fall more than 55 per cent in the first half of the year.
- 2025 Acquired by Sycamore Partners with Stefano Pessina and taken private; Boots separated into its own group.