Walgreen plans to keep its roots firmly planted in the United States, saying it will no longer pursue an overseas reorganization that would have trimmed its U.S. taxes but drew political scorn.
The nation’s largest drugstore chain — which bills itself as “America’s premier pharmacy” — said Wednesday that it will buy the remaining stake in Swiss health and beauty retailer Alliance Boots that it does not already own. The cash-stock deal is valued at more than $15 billion. Walgreens had contemplated the move since buying a 45 percent share in 2012.
Walgreen will not pull off an inversion, however, a tactic that has become increasingly popular with U.S. companies seeking tax relief, but which has sparked a growing backlash in Washington. The pressure from investors remains intense, however, and shares of Walgreen tumbled 14.3 percent to $59.21.
In an inversion, a U.S. company reorganizes in a country with a lower tax rate by acquiring or merging with a company overseas. Inversions allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes.
There have been 47 American companies that have put together inversions in the past decade, according to the Congressional Research Service. Several others are planning or considering the move, including the drugmaker AbbVie, which last month announced a roughly $55 billion combination with drugmaker Shire, incorporated in the United Kingdom.
— Associated Press
Fiat chief executive Sergio Marchionne on Wednesday blamed overblown news media reports and a “lack of understanding” of the merger with its U.S. unit, Chrysler, for a share sell-off that threatens to blow the planned tie-up off course.
Marchionne wants to incorporate the two carmakers into Dutch-registered entity Fiat Chrysler Automobiles, paving the way for a U.S. listing key to help fund an ambitious investment plan at the world’s No. 7 auto group.
But the merger could still fold if enough investors decide to exercise a right to sell their Fiat shares triggered by the automaker’s decision to move its headquarters and fiscal domicile away from Italy, its home for the past 115 years.
“The press has overplayed the withdrawal rights scenario,” Marchionne told analysts during a conference call on Chrysler earnings, which rose 22 percent. “We are paying the price for an overreaction . . . based on a lack of understanding of what this means.”
Concerns over the merger’s completion triggered a sell-off that saw Fiat shares lose nearly 9 percent in the past two trading sessions.
Under the terms of the merger deal, dissenting investors can sell their shares for a cash exit price of 7.727 euros ($10.34), nearly 20 percent more than Wednesday’s closing price of 6.47 euros ($8.66).
Fiat has said if it has to put out more than 500 million euros ($669 million) to pay off shareholders and creditors, the merger would not go ahead.
— Reuters
● Time Warner said its second-quarter net income rose 10 percent on strong results from its HBO and Turner properties. Results topped expectations, but investors sent shares tumbling 13 percent, to $74.24, on news late Tuesday that Rupert Murdoch’s 21st Century Fox was abandoning its bid for Time Warner. The company said profit increased to $850 million from $771 million in the same quarter a year earlier. Time Warner said revenue rose 3 percent to $6.79 billion from $6.61 billion in the same quarter a year ago.
● The U.S. trade deficit fell in June to its lowest level since January as imports dropped sharply. The trade deficit fell 7 percent in June to a seasonally adjusted $41.5 billion, from $44.7 billion in May, the Commerce Department said. Exports rose 0.1 percent to $195.9 billion, a record high. Imports fell 1.2 percent, the most in a year, to $237.4 billion.
● Target is adding its name to a legal defense of gay marriage, four years after the retailer was criticized for supporting a strident opponent of same-sex unions. Target said it has signed a court brief backing marriage equality and publicly declared its support of gay marriage, a move similar to those taken by Starbucks, Intel and Apple. “It is our belief that everyone should be treated equally under the law, and that includes rights we believe individuals should have related to marriage,” Jodee Kozlak, Target’s executive vice president of human resources, wrote on the company’s blog.
— From news services
● 8:30 a.m.: Weekly jobless claims.
● 10 a.m.: Weekly mortgage rates.
● Earnings: Freddie Mac.
