Walgreen to Buy 45% Stake in Boots for $6.7 Billion-Bloomberg

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.

http://www.bloomberg.com/news/2012-06-19/walgreen-to-acquire-45-alliance-boots-stake-for-6-7-billion.html