Walgreens Boots Alliance and the Rise and Rise of Stefano Pessina

As 2014 drew to a close, the second stage of a merger took place incorporating the American convenience stores group Walgreens with what was originally known as Boots the chemist of England. Boots had already morphed into Boots Alliance at the time of the merger

In the new year [January 15th, 2015] the new company announced its first dividends. The histories of the brands can be found in the excellent website of the new company. It positions itself as a first global-pharmacy led health and well-being company. This strap line may not be pretty but it has a rather ponderous truth reflected in the brands of Walgreen stores of America and the revamped Boots stores in the UK. The stores also hint at shared values and reasonably compatible cultures which could go some way to avoiding the pain that accompanies any merger.

WBA is not a football club

Walgreens Boots Alliance, has the new Nasdaq label WBA. [not to be confused with WBA, aka The Baggies, or West Bromwich Albion, another venerable brand in England, and a midlands- based Football club.] The merger was suggested to have been imposed on Walgreens by impatient shareholder activists.

Winners and Losers

The change had more executive bloodshed on the Walgreen side. Unsurprisingly, the veteran Stefano Pessina of Boots Alliance became the most obvious winner, just as he was when he engineered the Merger of Boots with his own Swiss-based operations earlier . The financing of the deal cost Walgreens five billion dollars plus shares. LWD subscribers will have followed the commercial rise and rise of Stefano Pessina in earlier posts in which I noted:

In the original merger between Boots and Alliance, the new board had a majority of former Boots executives. But the Alliance side was the more profitable, and Stephano brought with him a sizable shareholding and considerable personal wealth. Pessina had enough power to be magnanimous. Mr Baker [a departing Boots executive] may not have had much temptation to stay on when the alternative was a £10 million incentive to leave, with more chances of securing a new leadership role elsewhere.

Leadership lessons

I’m not sure of the leadership lessons here. Perhaps it is that self-made billionaires are not all ego-crazed narcissists. Maybe absolute power is not always accompanied by absolute ruthlessness.

Image

The image was one taken as I was visiting a Walgreens in Buffalo, NY last year. It’s not much to do with the merger, unless you read something into the caption …

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