Wednesday, August 6, 2014
Walgreen's Decides Against An Inversion
Walgreen's acquired the remaining shares of Alliance Boots that it did not own, but it decided not to reincorporate outside of the US. Walgreen's has been under pressure from a large shareholder to increase its profits. It could have done so by cutting its US taxes by reincorporating in a low tax state. Walgreen's decided to reduce costs instead of cutting its tax burden. One of the reasons for its decision was a concern for its reputation in the US. Most of its revenues come from its large retail operation in the US. It was under pressure from the government, which funds much of the consumer spending on the drugs that it sells, and it is also aware of the negative public reaction that an inversion would have on its brand. It is an American icon and it would have been costly to tarnish its image with the public.