U.S. pharmacy chain Walgreens announced this week that it's purchasing a 45 percent stake in European pharmacy powerhouse Alliance Boots for nearly $7 billion. The deal is seen as a first step toward outright acquisition, which would make the combined company the global pharmacy powerhouse with 11,000 stores in 12 countries. However, Walgreens' share price plunged after the announcement, due to concerns that it had dangerously exposed itself to fallout from Europe's debt crisis, which continues to rage. Is Walgreens' big bet on Europe a bad idea?
This is smart. The stagnant company must grow: Walgreens' share price "has gone nowhere over the last decade," says Jonathan Sibun at Britain's The Telegraph. The company is a "mature business that needs to look beyond its borders," particularly since investors are clamoring for "a growth story." Alliance Boots offers Walgreens access to British and European markets, as well as those in emerging economies. "All told it's a pretty powerful medicine."
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