Walgreen debuting bonds in Europe for boots takeover
Deerfield-based Walgreen Co. is debuting bonds in Europe as the U.S. drugstore group completes a $15.3 billion acquisition of the portion of Alliance Boots Holdings GmbH it doesn't already own.
The company is selling $954 million of six- and 11-year notes and as much as $937 million of 12-year securities, according to a person familiar with the matter, who asked not to be identified because they're not authorized to speak publicly. The bonds will be issued through its Walgreens Boots Alliance Inc. unit.
Walgreen is coming to Europe after raising $8 billion in the U.S. last week. The transaction will be the final stage of the 11.1 billion-pound leveraged buyout of the U.K. pharmacy chain by KKR & Co. and Italian billionaire Stefano Pessina in April 2007, the biggest European LBO at the time.
"Walgreen will have European revenues so it makes sense to have liabilities in Europe, too," said Luke Hickmore, the Edinburgh-based senior investment manager at Aberdeen Asset Management, which oversees about $530 billion. "Also, we've seen that repatriating cash abroad isn't straightforward for U.S. companies."
A London-based spokesman for Alliance Boots wasn't immediately available to comment on the bond sale.
Walgreen will pay about $5.29 billion in cash and $10 billion in stock for the remaining 55 percent stake in Alliance Boots, the Deerfield, Illinois-based company said in an Aug. 6 statement. Proceeds will also be used to refinance all of Alliance Boots' borrowings, as well as pay related fees and expenses, according to the person familiar with the matter.
American businesses including Apple Inc. and 3M Co. issued 54.8 billion euros of bonds this year, the most since 2007, data compiled by Bloomberg show.
The average yield on investment-grade bonds in the currency fell to a record 1.19 percent, while yields on securities denominated in pounds fell to 3.45 percent, 21 basis points from a record low, according to Bank of America Merrill Lynch index data.
--With assistance from Leo Laikola in London.
To contact the reporter on this story: John Glover in London at johngloverbloomberg.net To contact the editors responsible for this story: Shelley Smith at ssmith118bloomberg.net Jennifer Joan Lee, Abigail Moses