AM 720 KDWN
News, Traffic, Weather

Walgreen turns down inversion to cut tax bill

KDWN

Growing political heat and possible customer backlash helped dissuade Walgreen from trying to trim its tax bill by reorganizing overseas as part of an acquisition.

But experts say they don’t expect other companies considering the move to follow Walgreen’s lead and stay rooted in the United States.

Walgreen, the nation’s biggest drugstore chain, said Wednesday that it would no longer consider a so-called inversion, which has become popular among large, multi-national health care companies looking to cut U.S. taxes. The company said it will instead combine with the Swiss health and beauty retailer Alliance Boots to form a holding company that’s based in the U.S.

Walgreen Co. said in a statement that it was “mindful of the ongoing public reaction to a potential inversion” and its “unique role as an iconic American” retailer.

Walgreen’s decision follows a wave of recently announced inversions that have prompted President Barack Obama and members of Congress to voice growing concern about tax revenue the U.S. government could lose from these moves. Despite Walgreen’s decision, experts say U.S. companies will likely continue to pursue inversions because they can still reap big benefits by reorganizing overseas.

“We need fundamental corporate tax reform to solve this problem, and it isn’t going to happen in an election year,” said Donald Goldman, an Arizona State University professor.

Inversions involve a U.S. company reorganizing in another country by either acquiring or combining with another business. These deals provide tax relief in a number of ways. They allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes.

Inversions also provide some relief from the U.S. corporate income tax rate of 35 percent, which is the highest in the industrialized world. The U.S. had a competitive tax rate back in the 1980s but that changed when other countries started lowering their rates and the U.S. didn’t follow, said Cynthia Eakin, an associate accounting professor at the University of the Pacific.

“We haven’t paid attention to what’s going on globally,” she said. “We don’t really have a global tax strategy.”

There have been 47 U.S. companies that have put together inversions through tie-ups with foreign businesses over the past decade, according to the Congressional Research Service. Several others are planning or considering the move.

Walgreen was considering an inversion while it decided whether to buy the remaining portion of Alliance Boots that it didn’t already own. In 2012, the U.S. company bought a 45 percent stake in Alliance Boots, which runs the largest drugstore chain in the United Kingdom.

It ultimately decided against an inversion because the company wasn’t convinced the deal would pass IRS scrutiny. Walgreen didn’t design the acquisition as an inversion, so it would have to change key elements of it, including possibly the terms, to avoid IRS challenges that it was abusing the tax code.

An IRS fight could have led to a long legal battle and back taxes with penalties if the company lost, Walgreen officials told analysts during a Wednesday morning conference call.

Plus, the company had no assurances that tax code wouldn’t eventually be changed to remove some of the advantages companies get from inversions, spokesman Michael Polzin noted.

Additionally, Illinois Sen. Dick Durbin had sent a letter to Walgreen CEO Greg Wasson urging him to reconsider an inversion and warning that the company may find its customers are “deeply patriotic and will not support Walgreen’s decision to turn its back on the United States.”

Walgreen deals directly with consumers more than other companies – like drugmakers – that have tried inversions. So, Walgreen would be more sensitive to public reaction.

At the same time, companies face growing political pushback. The Obama administration has urged Congress to act swiftly to curtail inversions, and Democrats in both the House and Senate have introduced bills to rein in the practice. But the election year push is unlikely to succeed in a divided Congress, where Republicans favor more comprehensive tax reform.

Companies may pause their inversion plans to see how Congress reacts, tax lawyer Bret Wells said. But he said anything short of comprehensive tax reform won’t stop them from then adjusting their plans and continuing to pursue inversions.

“As long as the financial benefits stay in place, companies are going to go after them,” said Wells, an assistant law professor at the University of Houston.

Walgreen shares sank more than 14 percent, or $9.92, to $59.20 on Wednesday, after the drugstore chain announced its decision.

The company’s stock had advanced more than 20 percent so far this year, as of Tuesday, and set several new all-time high prices. The most recent came on June 19, when the shares hit $76.39.

Walgreen turns down inversion to cut tax bill

KDWN

Growing political heat and possible customer backlash helped dissuade Walgreen from trying to trim its tax bill by reorganizing overseas as part of an acquisition.

But experts say they don’t expect other companies considering the move to follow Walgreen’s lead and stay rooted in the United States.

Walgreen, the nation’s biggest drugstore chain, said Wednesday that it would no longer consider a so-called inversion, which has become popular among large, multi-national health care companies looking to cut U.S. taxes. The company said it will instead combine with the Swiss health and beauty retailer Alliance Boots to form a holding company that’s based in the U.S.

Walgreen Co. said in a statement that it was “mindful of the ongoing public reaction to a potential inversion” and its “unique role as an iconic American” retailer.

Walgreen’s decision follows a wave of recently announced inversions that have prompted President Barack Obama and members of Congress to voice growing concern about tax revenue the U.S. government could lose from these moves. Despite Walgreen’s decision, experts say U.S. companies will likely continue to pursue inversions because they can still reap big benefits by reorganizing overseas.

“We need fundamental corporate tax reform to solve this problem, and it isn’t going to happen in an election year,” said Donald Goldman, an Arizona State University professor.

Inversions involve a U.S. company reorganizing in another country by either acquiring or combining with another business. These deals provide tax relief in a number of ways. They allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes.

Inversions also provide some relief from the U.S. corporate income tax rate of 35 percent, which is the highest in the industrialized world. The U.S. had a competitive tax rate back in the 1980s but that changed when other countries started lowering their rates and the U.S. didn’t follow, said Cynthia Eakin, an associate accounting professor at the University of the Pacific.

“We haven’t paid attention to what’s going on globally,” she said. “We don’t really have a global tax strategy.”

There have been 47 U.S. companies that have put together inversions through tie-ups with foreign businesses over the past decade, according to the Congressional Research Service. Several others are planning or considering the move.

Walgreen was considering an inversion while it decided whether to buy the remaining portion of Alliance Boots that it didn’t already own. In 2012, the U.S. company bought a 45 percent stake in Alliance Boots, which runs the largest drugstore chain in the United Kingdom.

It ultimately decided against an inversion because the company wasn’t convinced the deal would pass IRS scrutiny. Walgreen didn’t design the acquisition as an inversion, so it would have to change key elements of it, including possibly the terms, to avoid IRS challenges that it was abusing the tax code.

An IRS fight could have led to a long legal battle and back taxes with penalties if the company lost, Walgreen officials told analysts during a Wednesday morning conference call.

Plus, the company had no assurances that tax code wouldn’t eventually be changed to remove some of the advantages companies get from inversions, spokesman Michael Polzin noted.

Additionally, Illinois Sen. Dick Durbin had sent a letter to Walgreen CEO Greg Wasson urging him to reconsider an inversion and warning that the company may find its customers are “deeply patriotic and will not support Walgreen’s decision to turn its back on the United States.”

Walgreen deals directly with consumers more than other companies – like drugmakers – that have tried inversions. So, Walgreen would be more sensitive to public reaction.

At the same time, companies face growing political pushback. The Obama administration has urged Congress to act swiftly to curtail inversions, and Democrats in both the House and Senate have introduced bills to rein in the practice. But the election year push is unlikely to succeed in a divided Congress, where Republicans favor more comprehensive tax reform.

The political rancor may make some companies think harder about attempting inversions. But Goldman, the Arizona State professor, still expects companies to pursue them until either the corporate tax rate is lowered or the U.S. stops applying the additional tax to income earned overseas.

Walgreen shares sank more than 14 percent, or $9.88, to $59.24 in Wednesday afternoon trading.

The company’s stock had advanced more than 20 percent so far this year, as of Tuesday, and set several new all-time high prices. The most recent came on June 19, when the shares hit $76.39.

Walgreen turns down inversion to cut tax bill

KDWN

Walgreen plans to keep its roots firmly planted in the United States, saying it will no longer pursue an overseas reorganization that would have trimmed its U.S. taxes but drew political scorn.

The nation’s largest drugstore chain – which bills itself as “America’s premier pharmacy” – said Wednesday that it will buy the remaining stake in Swiss health and beauty retailer Alliance Boots that it does not already own.

The cash-stock deal is valued at more than $15 billion. Walgreen had contemplated the move since buying a 45 percent share in 2012.

Walgreen will not pull off an inversion, however, a tactic that has become increasingly popular with U.S. companies seeking tax relief, but which has sparked growing backlash in Washington.

The pressure from investors remains intense, however, and shares of Walgreen tumbled sharply Wednesday morning, after the Deerfield, Illinois, company announced its plans and lowered its 2016 earnings goal for the combined company.

There have been 47 U.S. companies that have put together inversions through tie-ups with foreign businesses over the past decade, according to the Congressional Research Service.

Several others are planning or considering the move. Those including the drugmaker AbbVie, which last month announced a roughly $55 billion combination with drugmaker Shire Plc, which is incorporated in the United Kingdom.

Walgreen, however, said it was not confident such a deal could withstand IRS scrutiny.

A spokesman also said its original agreement with Alliance Boots, which runs the United Kingdom’s largest drugstore chain, also was not structured as an inversion, and that would have forced the company to essentially create a new deal.

Walgreen CEO Greg Wasson said the board and outside advisers weighed several benefits and risks, including the hard-to-quantify but significant potential for consumer backlash and political headaches.

Companies are facing a growing pushback from Democrats in Congress and President Barack Obama due to lost U.S. revenue from corporate taxes from inversions. On Tuesday, the Treasury Department said that it was considering actions that could limit the ability of companies to use the tactic.

Illinois Sen. Dick Durbin had sent a letter to Wasson urging him to reconsider an inversion and warning that the company may find its customers are “deeply patriotic and will not support Walgreen’s decision to turn its back on the United States.”

In an inversion, a U.S. company reorganizes in a country with a lower tax rate by acquiring or merging with a company overseas. Inversions allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes. That money can be used to reinvest in the business or to fund dividends and buybacks, among other things.

Inversions also can reduce a corporation’s corporate tax liability in other ways, and they provide some relief from the U.S. corporate tax rate of 35 percent, which is the highest in the industrialized world.

Walgreen Co. had drawn criticism for considering an inversion, in part because it receives part of its revenue through government-funded programs that help cover the poor and elderly people. The company addressed that issue Wednesday.

“The company also was mindful of the ongoing public reaction to a potential inversion and Walgreens unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs,” Walgreen Co. said in a statement.

Morningstar analyst Vishnu Lekraj has said Wall Street had largely expected Walgreen to pull off an inversion, even though he thought there was a strong chance it wouldn’t happen, in part due to public backlash.

Instead of an inversion, Walgreen and Alliance Boots will form a new holding company named Walgreens Boots Alliance Inc. that will be headquartered in the Chicago area. Wasson will serve as CEO.

Walgreen will pay about $5.29 billion in cash and 144.3 million shares of its stock, a portion valued at $9.97 billion based on Tuesday’s closing price. The companies expect the deal to close in next year’s first quarter.

The company also said it expects adjusted earnings of between $4.25 and $4.60 per share from the combined operation by 2016. That translates at the midpoint of the range into about $7.2 billion in adjusted earnings, which is lower than a previous range of $9 billion to $9.5 billion the company had forecast.

Wasson told analysts during a Wednesday morning conference call that he wasn’t happy about lowering the company’s goal, but the move reflected global pharmacy reimbursement pressures. That includes lower reimbursement for its Medicare prescription drug business in the United States.

Walgreen shares sank more than 13 percent, or $9.62, to $59.50 in Wednesday morning trading. The stock had started sliding Tuesday afternoon after reports first surfaced that Walgreen decided not to pursue an inversion.

The company’s stock has set several new all-time high prices so far this year, the most recent on June 19, when the stock hit $76.39. The shares had advanced more than 20 percent this year, as of Tuesday’s market close.

Walgreen turns down inversion to cut tax bill

KDWN

Walgreen plans to keep its roots firmly planted in the United States, saying it will no longer pursue an overseas reorganization that would have trimmed its U.S. taxes but drew political scorn.

The nation’s largest drugstore chain – which bills itself as “America’s premier pharmacy” – said Wednesday that it will buy the remaining stake in Swiss health and beauty retailer Alliance Boots that it does not already own.

The cash-stock deal is valued at more than $15 billion. Walgreen had contemplated the move since buying a 45 percent share in 2012.

Walgreen will not pull off an inversion, however, a tactic that has become increasingly popular with U.S. companies seeking tax relief, but which has sparked growing backlash in Washington.

The pressure from investors remains intense, however, and shares of Walgreen tumbled sharply Wednesday morning, after the Deerfield, Illinois, company announced its plans and lowered its 2016 earnings goal for the combined company.

There have been 47 U.S. companies that have put together inversions through tie-ups with foreign businesses over the past decade, according to the Congressional Research Service.

Several others are planning or considering the move. Those including the drugmaker AbbVie, which last month announced a roughly $55 billion combination with drugmaker Shire Plc, which is incorporated in the United Kingdom.

Walgreen, however, said it was not confident such a deal could withstand IRS scrutiny.

A spokesman also said its original agreement with Alliance Boots, which runs the United Kingdom’s largest drugstore chain, also was not structured as an inversion, and that would have forced the company to essentially create a new deal.

Walgreen CEO Greg Wasson said the board and outside advisers weighed several benefits and risks, including the hard-to-quantify but significant potential for consumer backlash and political headaches.

Companies are facing a growing pushback from Democrats in Congress and President Barack Obama due to lost U.S. revenue from corporate taxes from inversions. On Tuesday, the Treasury Department said that it was considering actions that could limit the ability of companies to use the tactic.

Illinois Sen. Dick Durbin had sent a letter to Wasson urging him to reconsider an inversion and warning that the company may find its customers are “deeply patriotic and will not support Walgreen’s decision to turn its back on the United States.”

In an inversion, a U.S. company reorganizes in a country with a lower tax rate by acquiring or merging with a company overseas. Inversions allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes. That money can be used to reinvest in the business or to fund dividends and buybacks, among other things.

Inversions also can reduce a corporation’s corporate tax liability in other ways, and they provide some relief from the U.S. corporate tax rate of 35 percent, which is the highest in the industrialized world.

Walgreen Co. had drawn criticism for considering an inversion, in part because it receives part of its revenue through government-funded programs that help cover the poor and elderly people. The company addressed that issue Wednesday.

“The company also was mindful of the ongoing public reaction to a potential inversion and Walgreens unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs,” Walgreen Co. said in a statement.

Morningstar analyst Vishnu Lekraj has said Wall Street had largely expected Walgreen to pull off an inversion, even though he thought there was a strong chance it wouldn’t happen, in part due to public backlash.

Instead of an inversion, Walgreen and Alliance Boots will form a new holding company named Walgreens Boots Alliance Inc. that will be headquartered in the Chicago area. Wasson will serve as CEO.

Walgreen will pay about $5.29 billion in cash and 144.3 million shares of its stock, a portion valued at $9.97 billion based on Tuesday’s closing price. The companies expect the deal to close in next year’s first quarter.

The company also said it expects adjusted earnings of between $4.25 and $4.60 per share from the combined operation by 2016. That translates at the midpoint of the range into about $7.2 billion in adjusted earnings, which is lower than a previous range of $9 billion to $9.5 billion the company had forecast.

Wasson told analysts during a Wednesday morning conference call that he wasn’t happy about lowering the company’s goal, but the move reflected global pharmacy reimbursement pressures. That includes lower reimbursement for its Medicare prescription drug business in the United States.

Walgreen shares sank more than 13 percent, or $9.62, to $59.50 in Wednesday morning trading. The stock had started sliding Tuesday afternoon after reports first surfaced that Walgreen decided not to pursue an inversion.

The company’s stock has set several new all-time high prices so far this year, the most recent on June 19, when the stock hit $76.39. The shares had advanced more than 20 percent this year, as of Tuesday’s market close.

Walgreen turns down inversion to cut tax bill

KDWN

Walgreen plans to keep its roots firmly planted in the United States, saying it will no longer pursue an overseas reorganization that would have trimmed its U.S. taxes but drew political scorn.

The nation’s largest drugstore chain – which bills itself as “America’s premier pharmacy” – said Wednesday that it will buy the remaining stake in Swiss health and beauty retailer Alliance Boots that it does not already own.

The cash-stock deal is valued at more than $15 billion. Walgreen had contemplated the move since buying a 45 percent share in 2012.

Walgreen will not pull off an inversion, however, a tactic that has become increasingly popular with U.S. companies seeking tax relief, but which has sparked growing backlash in Washington.

The pressure from investors remains intense, however, and shares of Walgreen tumbled sharply Wednesday morning, after the Deerfield, Illinois, company announced its plans and lowered its 2016 earnings goal for the combined company.

There have been 47 U.S. companies that have put together inversions through tie-ups with foreign businesses over the past decade, according to the Congressional Research Service.

Several others are planning or considering the move. Those including the drugmaker AbbVie, which last month announced a roughly $55 billion combination with drugmaker Shire Plc, which is incorporated in the United Kingdom.

Walgreen, however, said it was not confident such a deal could withstand IRS scrutiny.

A spokesman also said its original agreement with Alliance Boots, which runs the United Kingdom’s largest drugstore chain, also was not structured as an inversion, and that would have forced the company to essentially create a new deal.

Walgreen CEO Greg Wasson said the board and outside advisers weighed several benefits and risks, including the hard-to-quantify but significant potential for consumer backlash and political headaches.

Companies are facing a growing pushback from Democrats in Congress and President Barack Obama due to lost U.S. revenue from corporate taxes from inversions. On Tuesday, the Treasury Department said that it was considering actions that could limit the ability of companies to use the tactic.

Illinois Sen. Dick Durbin had sent a letter to Wasson urging him to reconsider an inversion and warning that the company may find its customers are “deeply patriotic and will not support Walgreen’s decision to turn its back on the United States.”

In an inversion, a U.S. company reorganizes in a country with a lower tax rate by acquiring or merging with a company overseas. Inversions allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes. That money can be used to reinvest in the business or to fund dividends and buybacks, among other things.

Inversions also can reduce a corporation’s corporate tax liability in other ways, and they provide some relief from the U.S. corporate tax rate of 35 percent, which is the highest in the industrialized world.

Walgreen Co. had drawn criticism for considering an inversion, in part because it receives part of its revenue through government-funded programs that help cover the poor and elderly people. The company addressed that issue Wednesday.

“The company also was mindful of the ongoing public reaction to a potential inversion and Walgreens unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs,” Walgreen Co. said in a statement.

Morningstar analyst Vishnu Lekraj has said Wall Street had largely expected Walgreen to pull off an inversion, even though he thought there was a strong chance it wouldn’t happen, in part due to public backlash.

Instead of an inversion, Walgreen and Alliance Boots will form a new holding company named Walgreens Boots Alliance Inc. that will be headquartered in the Chicago area. Wasson will serve as CEO.

Walgreen will pay about $5.29 billion in cash and 144.3 million shares of its stock, a portion valued at $9.97 billion based on Tuesday’s closing price. The companies expect the deal to close in next year’s first quarter.

The company also said it expects adjusted earnings of between $4.25 and $4.60 per share from the combined operation by 2016. That translates at the midpoint of the range into about $7.2 billion in adjusted earnings, which is lower than a previous range of $9 billion to $9.5 billion the company had forecast.

Wasson told analysts during a Wednesday morning conference call that he wasn’t happy about lowering the company’s goal, but the move reflected global pharmacy reimbursement pressures. That includes lower reimbursement for its Medicare prescription drug business in the United States.

Walgreen shares sank more than 12 percent, or $8.61, to $60.51 in Wednesday morning trading. The stock had started sliding Tuesday afternoon after reports first surfaced that Walgreen decided not to pursue an inversion.

The company’s stock has set several new all-time high prices so far this year, the most recent on June 19, when the stock hit $76.39. The shares had advanced more than 20 percent this year, as of Tuesday’s market close.

Walgreen turns down inversion to cut tax bill

KDWN

Walgreen plans to keep its roots firmly planted in the United States, saying it will no longer pursue an overseas reorganization that would have trimmed its U.S. taxes but drew political scorn.

The nation’s largest drugstore chain – which bills itself as “America’s premier pharmacy” – said Wednesday that it will buy the remaining stake in Swiss health and beauty retailer Alliance Boots that it does not already own.

The cash-stock deal is valued at more than $15 billion. Walgreen had contemplated the move since buying a 45 percent share in 2012.

Walgreen will not pull off an inversion, however, a tactic that has become increasingly popular with U.S. companies seeking tax relief, but which has sparked growing backlash in Washington.

The pressure from investors remains intense, however, and shares of Walgreen tumbled sharply Wednesday morning, after the Deerfield, Illinois, company announced its plans and lowered its 2016 earnings goal for the combined company.

There have been 47 U.S. companies that have put together inversions through tie-ups with foreign businesses over the past decade, according to the Congressional Research Service.

Several others are planning or considering the move. Those including the drugmaker AbbVie, which last month announced a roughly $55 billion combination with drugmaker Shire Plc, which is incorporated in the United Kingdom.

Walgreen, however, said it was not confident such a deal could withstand IRS scrutiny.

A spokesman also said its original agreement with Alliance Boots, which runs the United Kingdom’s largest drugstore chain, also was not structured as an inversion, and that would have forced the company to essentially create a new deal.

Walgreen CEO Greg Wasson said the board and outside advisers weighed several benefits and risks, including the hard-to-quantify but significant potential for consumer backlash and political headaches.

Companies are facing a growing pushback from Democrats in Congress and President Barack Obama due to lost U.S. revenue from corporate taxes from inversions. On Tuesday, the Treasury Department said that it was considering actions that could limit the ability of companies to use the tactic.

Illinois Sen. Dick Durbin had sent a letter to Wasson urging him to reconsider an inversion and warning that the company may find its customers are “deeply patriotic and will not support Walgreen’s decision to turn its back on the United States.”

In an inversion, a U.S. company reorganizes in a country with a lower tax rate by acquiring or merging with a company overseas. Inversions allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes. That money can be used to reinvest in the business or to fund dividends and buybacks, among other things.

Inversions also can reduce a corporation’s corporate tax liability in other ways, and they provide some relief from the U.S. corporate tax rate of 35 percent, which is the highest in the industrialized world.

Walgreen Co. had drawn criticism for considering an inversion, in part because it receives part of its revenue through government-funded programs that help cover the poor and elderly people. The company addressed that issue Wednesday.

“The company also was mindful of the ongoing public reaction to a potential inversion and Walgreens unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs,” Walgreen Co. said in a statement.

Morningstar analyst Vishnu Lekraj has said Wall Street had largely expected Walgreen to pull off an inversion, even though he thought there was a strong chance it wouldn’t happen, in part due to public backlash.

Instead of an inversion, Walgreen and Alliance Boots will form a new holding company named Walgreens Boots Alliance Inc. that will be headquartered in the Chicago area. Wasson will serve as CEO.

Walgreen will pay about $5.29 billion in cash and 144.3 million shares of its stock, a portion valued at $9.97 billion based on Tuesday’s closing price. The companies expect the deal to close in next year’s first quarter.

The company also said it expects adjusted earnings of between $4.25 and $4.60 per share from the combined operation by 2016. That translates at the midpoint of the range into about $7.2 billion in adjusted earnings, which is lower than a previous range of $9 billion to $9.5 billion the company had forecast.

Wasson told analysts during a Wednesday morning conference call that he wasn’t happy about lowering the company’s goal, but the move reflected global pharmacy reimbursement pressures. That includes lower reimbursement for its Medicare prescription drug business in the United States.

Walgreen shares sank more than 12 percent, or $8.61, to $60.51 in Wednesday morning trading. The stock had started sliding Tuesday afternoon after reports first surfaced that Walgreen decided not to pursue an inversion.

The company’s stock has set several new all-time high prices so far this year, the most recent on June 19, when the stock hit $76.39. The shares had advanced more than 20 percent this year, as of Tuesday’s market close.

Walgreen turns down inversion to cut tax bill

KDWN

Walgreen plans to keep its roots firmly planted in the United States, saying it will no longer pursue an overseas reorganization that would have trimmed its U.S. taxes but drew political scorn.

The nation’s largest drugstore chain – which bills itself as “America’s premier pharmacy” – said Wednesday that it will buy the remaining stake in Swiss health and beauty retailer Alliance Boots that it does not already own.

The cash-stock deal is valued at more than $15 billion. Walgreen had contemplated the move since buying a 45 percent share in 2012.

Walgreen will not pull off an inversion, however, a tactic that has become increasingly popular with U.S. companies seeking tax relief, but which has sparked growing backlash in Washington.

The pressure from investors remains intense, however, and shares of Walgreen tumbled sharply Wednesday morning, after the Deerfield, Illinois, company announced its plans and lowered its 2016 earnings goal for the combined company.

There have been 47 U.S. companies that have put together inversions through tie-ups with foreign businesses over the past decade, according to the Congressional Research Service.

Several others are planning or considering the move. Those including the drugmaker AbbVie, which last month announced a roughly $55 billion combination with drugmaker Shire Plc, which is incorporated in the United Kingdom.

Walgreen, however, said it was not confident such a deal could withstand IRS scrutiny.

A spokesman also said its original agreement with Alliance Boots, which runs the United Kingdom’s largest drugstore chain, also was not structured as an inversion, and that would have forced the company to essentially create a new deal.

Walgreen CEO Greg Wasson said the board and outside advisers weighed several benefits and risks, including the hard-to-quantify but significant potential for consumer backlash and political headaches.

Companies are facing a growing pushback from Democrats in Congress and President Barack Obama due to lost U.S. revenue from corporate taxes from inversions. On Tuesday, the Treasury Department said that it was considering actions that could limit the ability of companies to use the tactic.

Illinois Sen. Dick Durbin had sent a letter to Wasson urging him to reconsider an inversion and warning that the company may find its customers are “deeply patriotic and will not support Walgreen’s decision to turn its back on the United States.”

In an inversion, a U.S. company reorganizes in country with a lower tax rate by acquiring or merging with a company overseas. Inversions allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes. That money can be used to reinvest in the business or to fund dividends and buybacks, among other things.

Inversions also can reduce a corporation’s corporate tax liability in other ways, and they provide some relief from the U.S. corporate tax rate of 35 percent, which is the highest in the industrialized world.

Walgreen Co. had drawn criticism for considering an inversion, in part because it receives part of its revenue through government-funded programs that help cover the poor and elderly people. The company addressed that issue Wednesday.

“The company also was mindful of the ongoing public reaction to a potential inversion and Walgreens unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs,” Walgreen Co. said in a statement.

Morningstar analyst Vishnu Lekraj has said Wall Street had largely expected Walgreen to pull off an inversion, even though he thought there was a strong chance it wouldn’t happen, in part due to public backlash.

Instead of an inversion, Walgreen and Alliance Boots will form a new holding company named Walgreens Boots Alliance Inc. that will be headquartered in the Chicago area. Wasson will serve as CEO.

Walgreen will pay about $5.29 billion in cash and 144.3 million shares of its stock, a portion valued at $9.97 billion based on Tuesday’s closing price. The companies expect the deal to close in next year’s first quarter.

The company also said it expects adjusted earnings of between $4.25 and $4.60 per share from the combined operation by 2016. That translates at the midpoint of the range into about $7.2 billion in adjusted earnings, which is lower than a previous range of $9 billion to $9.5 billion the company had forecast.

Wasson told analysts during a Wednesday morning conference call that he wasn’t happy about lowering the company’s goal, but the move reflected global pharmacy reimbursement pressures. That includes lower reimbursement for its Medicare prescription drug business in the United States.

Walgreen shares sank nearly 14 percent, or $9.50, to $59.62 in Wednesday morning trading. The stock had started sliding Tuesday afternoon after reports first surfaced that Walgreen decided not to pursue an inversion.

The company’s stock has set several new all-time high prices so far this year, the most recent on June 19, when the stock hit $76.39. The shares had advanced more than 20 percent this year, as of Tuesday’s market close.

Walgreen turns down inversion to cut tax bill

KDWN

Walgreen plans to keep its roots firmly planted in the United States, saying it will no longer pursue an overseas reorganization that would have trimmed the amount of U.S. taxes it pays.

The nation’s largest drugstore chain said that, as previously planned, it will buy the remaining stake in Swiss health and beauty retailer Alliance Boots that it does not already own. It will not pull off an inversion, however, a tactic that has become increasingly popular with U.S. companies seeking tax relief, but which has sparked a backlash in Washington and among the public.

The pressure from investors remains intense, however, and shares of Walgreen tumbled sharply before the opening bell Wednesday.

There have been 47 U.S. companies that have put together inversions through tie-ups with foreign businesses over the past decade, according to the Congressional Research Service. Several others are planning or considering the move, including the drugmaker AbbVie, which announced last month a roughly $55 billion combination with Irish drugmaker Shire Plc, which is incorporated in the United Kingdom.

Walgreen, however, said it was not confident such a deal could withstand IRS scrutiny.

There is also an intensifying pushback from Congress and President Barack Obama due to lost U.S. revenue from corporate taxes from inversions.

And on Tuesday, the Treasury Department said that it was considering actions that could limit the ability of companies to use the tactic.

In an inversion a U.S. company reorganizes in country with a lower tax rate by acquiring or merging with a company overseas. Inversions allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes. That can help fund dividends and buybacks.

Inversions also can reduce a corporation’s corporate tax liability in other ways and they provide some relief from the U.S. corporate tax rate of 35 percent, which is the highest in the industrialized world.

Walgreen Co. had drawn criticism for considering an inversion, in part because it receives a portion of its revenue through government funded programs that help cover the sick and elderly people. The company addressed that issue Wednesday.

“The company also was mindful of the ongoing public reaction to a potential inversion and Walgreens unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs,” Walgreen Co. said in a statement.

Morningstar analyst Vishnu Lekraj said Wall Street had largely expected Walgreen to pull off an inversion, even though he thought there was a strong chance it wouldn’t happen, in part due to public backlash.

Shares fell 6 percent after the company announced the decision, and fell further after it trimmed its outlook for the combined company in 2016

Walgreen shares fell $11.12, or 16 percent, to $58 in pre-market trading.

Walgreen turns down inversion to cut tax bill

KDWN

Walgreen plans to keep its roots firmly planted in the United States, saying it will no longer pursue an overseas reorganization that would have trimmed the amount of U.S. taxes it pays.

The nation’s largest drugstore chain said that, as previously planned, it will buy the remaining stake in Swiss health and beauty retailer Alliance Boots that it does not already own. It will not pull off an inversion, however, a tactic that has become increasingly popular with U.S. companies seeking tax relief, but which has sparked a backlash in Washington and among the public.

The pressure from investors remains intense, however, and shares of Walgreen tumbled sharply before the opening bell Wednesday.

There have been 47 U.S. companies that have put together inversions through tie-ups with foreign businesses over the past decade, according to the Congressional Research Service. Several others are planning or considering the move, including the drugmaker AbbVie, which announced last month a roughly $55 billion combination with Irish drugmaker Shire Plc, which is incorporated in the United Kingdom.

Walgreen, however, said it was not confident such a deal could withstand IRS scrutiny.

There is also an intensifying pushback from Congress and President Barack Obama due to lost U.S. revenue from corporate taxes from inversions.

And on Tuesday, the Treasury Department said that it was considering actions that could limit the ability of companies to use the tactic.

In an inversion a U.S. company reorganizes in country with a lower tax rate by acquiring or merging with a company overseas. Inversions allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes. That can help fund dividends and buybacks.

Inversions also can reduce a corporation’s corporate tax liability in other ways and they provide some relief from the U.S. corporate tax rate of 35 percent, which is the highest in the industrialized world.

Walgreen Co. had drawn criticism for considering an inversion, in part because it receives a portion of its revenue through government funded programs that help cover the sick and elderly people. The company addressed that issue Wednesday.

“The company also was mindful of the ongoing public reaction to a potential inversion and Walgreens unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs,” Walgreen Co. said in a statement.

Morningstar analyst Vishnu Lekraj said Wall Street had largely expected Walgreen to pull off an inversion, even though he thought there was a strong chance it wouldn’t happen, in part due to public backlash.

Shares fell 6 percent after the company announced the decision, and fell further after it trimmed its outlook for the combined company in 2016

Walgreen shares fell $11.12, or 16 percent, to $58 in pre-market trading.

Walgreen turns down inversion to cut tax bill

KDWN

Walgreen plans to keep its roots firmly planted in the United States, saying it will no longer pursue an overseas reorganization that would have trimmed the amount of U.S. taxes it pays.

The nation’s largest drugstore chain said Wednesday that, as previously planned, it will buy the remaining stake in Swiss health and beauty retailer Alliance Boots that it does not already own.

It will not pull off an inversion, however, a tactic that has become increasingly popular with U.S. companies seeking tax relief, but which has sparked a backlash in Washington and among the public.

There have been 47 U.S. companies that have, through tie-ups with foreign businesses over the past decade, created inversion schemes, according to the Congressional Research Service.

Several others are planning or considering the move.

After exploring a tax inversion strategy, Walgreen said that it was not confident that the structure of the deal could withstand IRS scrutiny.

At the same time, there is an intensifying pushback from Congress and President Barack Obama due to lost U.S. revenue from corporate taxes from inversions.

And on Tuesday, the Treasury Department said that it was considering actions that could limit the ability of companies to use the tactic.

In an inversion a U.S. company reorganizes in country with a lower tax rate by acquiring or merging with a company overseas. Companies are seeking some relief from the U.S. corporate tax rate of 35 percent, which is the highest in the world. Inversions also allow them to avoid paying taxes on income they transfer back the parent company from overseas, and they can reduce the U.S. corporate tax liability in other ways as well.

Walgreen Co. had drawn criticism for considering an inversion, in part because it receives a portion of its revenue through government funded programs that help cover the sick and elderly people. The company addressed that issue Wednesday.

“The company also was mindful of the ongoing public reaction to a potential inversion and Walgreens unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs,” Walgreen Co. said in a statement.

Walgreen shares sank more than 6 percent, or $4.22, to $64.90 before markets opened Wednesday.

Walgreen turns down inversion to cut tax bill

KDWN

Walgreen plans to keep its roots firmly planted in the United States, saying it will no longer pursue an overseas reorganization of the company that would have trimmed the amount of U.S. taxes it pays.

The nation’s largest drugstore chain said early Wednesday that as previously planned, it will buy the remaining stake in Alliance Boots that it does not already own, but it will not pull off an inversion with the Swiss health and beauty retailer.

The Deerfield, Illinois, company says it is not in the best long-term interest of its shareholders to re-domicile outside the United States.

Shares are down almost 5 percent in premarket trading.