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Walgreen turns down inversion, which could have cut tax bill

In this Wednesday, May 14, 2014 photo, a customer walks toward an entrance to a Walgreens store, in Boston. Walgreen plans to keep its roots firmly planted in the United States, saying Wednesday, Aug. 6, 2014 it will no longer pursue an overseas reorganization that would have trimmed the amount of U.S. taxes it pays. (AP Photo/Steven Senne) NYBZ116

In this Wednesday, May 14, 2014 photo, a customer walks toward an entrance to a Walgreens store, in Boston. Walgreen plans to keep its roots firmly planted in the United States, saying Wednesday, Aug. 6, 2014 it will no longer pursue an overseas reorganization that would have trimmed the amount of U.S. taxes it pays. (AP Photo/Steven Senne) NYBZ116

Growing political heat and possible customer backlash helped dissuade Walgreen from trying to trim its tax bill by reorganizing overseas as part of an acquisition.

But experts say they don't expect other companies considering the move to follow Walgreen's lead and stay rooted in the United States.

Walgreen, the nation's biggest drugstore chain, said Wednesday that it would no longer consider a so-called inversion, which has become popular among large, multinational health care companies looking to cut U.S. taxes. The company said it will instead buy the remaining stake in Swiss health and beauty retailer Alliance Boots that it does not already own for more than $15 billion. Walgreen had contemplated the move since buying a 45 percent share in 2012.

Walgreen said in a statement that it was "mindful of the ongoing public reaction to a potential inversion" and its "unique role as an iconic American" retailer.

Walgreen's decision follows a wave of recently announced inversions that have prompted President Barack Obama and members of Congress to voice growing concern about tax revenue the U.S. government could lose from these moves.

Inversions involve a U.S. company reorganizing in another country by either acquiring or combining with another business. These deals provide tax relief in a number of ways. They allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes. Inversions also provide some relief from the U.S. corporate income tax rate of 35 percent, which is the highest in the industrialized world.

There have been 47 U.S. companies that have put together inversions through tieups with foreign businesses over the past decade, according to the Congressional Research Service. Several others are planning or considering the move.

Walgreen shares sank $9.88, or more than 14 percent, to close at $59.21 Wednesday.

Walgreen turns down inversion, which could have cut tax bill 08/06/14 [Last modified: Wednesday, August 6, 2014 6:46pm]
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