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Walgreen drops on report it will keep US tax base

Published on NewsOK Modified: August 5, 2014 at 6:56 pm •  Published: August 5, 2014
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WASHINGTON (AP) — Shares of Walgreen Co. fell Tuesday on media reports that the nation's largest drugstore chain will not reincorporate itself overseas — a politically touchy move that could have significantly lowered its tax bill.

Walgreen owns a 45 percent stake in Alliance Boots, the largest drugstore chain in the United Kingdom. Walgreen has said it will soon announce whether it will acquire the remaining stake of the company. It has been considering whether to use an organization technique called an inversion to take advantage of the U.K's lower corporate tax rate.

Sky News of the U.K. reported Tuesday, citing people it did not identify, that Deerfield, Illinois-based Walgreen will acquire Alliance Boots, but without moving its tax base overseas.

Walgreen said late Tuesday that it would announce "several updates to its strategic transaction" with Boots on Wednesday. The company runs more than 8,200 drugstores in the U.S.

Company shares fell $2.99, or 4.2 percent, to close at $69.12 in trading Tuesday. They added 1.3 percent to $70.01 in after-hours trading.

The reports come as President Barack Obama and members of Congress have denounced inversions as an unpatriotic trick used to dodge U.S. taxes.

In an inversion, a U.S. business combines with a foreign company in a country with a lower tax rate, allowing the company to lower its tax bill. Frequently the companies maintain their U.S. headquarters and operations, and the U.S. entity often maintains control of the company.

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