Walgreen May Ditch US for Switzerland

One of the main themes for the markets this year has been the number of companies taking advantage of cheap capital to make mergers & acquisitions.  According to Dealogic, $1.83 trillion was spent on mergers & acquisitions in the first six months of the year, the highest level since the first half of 2007.  Despite the impressive flow of deals, perhaps what is more interesting is the amount of cross-border deals taking place, which was $626.3 billion in the first six months of 2014, up 84% from 2013.  Many US-based companies are using their cash held overseas to buy international companies and then relocating headquarters overseas to lower their tax burden, which is a disturbing trend.  Read the article below to read how an iconic US brand may be moving its headquarters overseas.

Scott Smith
C&J Wealth Advisors
Article credits 7/16/2014 | By MSN Money Partner | Paul Ziobro | The Wall Street Journal

Walgreen May Ditch US for Switzerland
The move, known as an inversion, has never been attempted by a major American retailer.

Walgreen’s (WAG) first pharmacy opened 113 years ago inside a hotel on Chicago’s South Side and this year, the chain will derive nearly all its sales and most of its profits from its 8,700 U.S. locations.

Destination Switzerland

But Walgreen is currently thinking about leaving American shores, as part a plan to buy the rest of Alliance Boots GmbH, which operates a U.K. drugstore chain and is based in Switzerland.

The move could help Walgreen lower its U.S. tax bill saving the company hundreds of millions of dollars a year — money that wouldn’t flow into the U.S. Treasury.

If it goes ahead, it would be an unusual use of the controversial and complex maneuver known as an inversion. While well tested among pharmaceutical and manufacturing companies that earn much of their income overseas or have assets like patents that are held offshore, the move has never been attempted by a major U.S. retailer, according to tax experts.

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