Walgreen (WAG) is acquiring a 45 percent stake in the U.K. drugstore chain Alliance Boots for $6.7 billion.
The stated purpose of this acquisition is to gain global scale but I don't think the timing is very good. Alliance Boots traded at distressed levels a couple of years back do to a large debt load, and a significant global recession and Walgreen's would have been better trying to take some action back then if this is their strategic
initiative. I believe that Walgreen's is playing catch up to CVS which has a better scripts business giving them better operating leverage and growth. Walgreen has been a great company for decades but this is a critical time for them to execute. I don't disagree with the overall plan of buying Alliance Boots and eventually taking a controlling stake, but if Walgreen's isn't buying the company outright initially they should have tried to build that majority stake at cheaper prices.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.