Gregory D. Wasson
President and Chief Executive Officer
108 Wilmot Road
Deerfield, IL 60015
Dear Mr. Wasson:
Recent reports indicate that Walgreens plans to buy the remaining 55 percent stake in Swiss-based retailer and wholesaler Alliance Boots so it can claim domicile abroad and dodge U.S. taxes. Given how much of Walgreens’ revenue comes from U.S. taxpayers and how much U.S. taxpayer-funded infrastructure Walgreens relies on to support its business, I strongly urge you and the board of directors to reconsider this move.
Walgreens has been in Illinois for its entire 113-year history. Its stores are a staple in our communities. Families have come to rely on the many goods and services available in your stores, including access to prescription and over-the-counter medication.
Customers have many choices about where to shop and where to have their prescriptions filled. I believe you will find that your customers are deeply patriotic and will not support Walgreen’s decision to turn its back on the United States. Nearly all of your $2.5 billion in profits earned last year were from sales to U.S. taxpaying customers.
Walgreens could dodge an estimated nearly $4 billion in taxes over the next 5 years, if your company inverts. I recognize that potential windfall in profit is an attractive option for shareholders. On the other hand, much of Walgreens financial success was built on programs and infrastructure provided by the U.S. government and paid for by U.S. taxpayers. The future success of Walgreens will continue to depend on U.S. taxpayers and government-funded programs, yet Walgreens will be using a clever tax dodge to avoid paying $4 billion in US taxes
Further, it is not clear to me how you can in good conscience build a profitable company using these public assets and then organize your financial holdings specifically to avoid paying taxes on those profits.
Nearly 25 percent of Walgreens profits were from U.S.-funded Medicare and Medicaid pr
Walgreens enjoy your new home, we in the USA will enjoy shopping in an American store
Sentiment: Strong Sell
After all the cuts to meet earnings with cuts, the last and only lever left to pull in meeting projection is Inversion.
After this lever is pulled there is nothing left to use to meet earnings projections.
That is why the 2012 projection has been pulled down.
Who has done the Tax saving calculations for Walgreens are the Wall-street
financiers. so your gotcha needs to be address to this group who will be funding the second step of the Alliance boots merger.
4 billion is the number they put on USA tax saving with a inversion.
And these folks are now increasingly Concerned about the revenue guidance put out by Walgreens and Alliance Boots in 2012 when they made a funding commitment.
Now CAGR(compounded AGR) has been tracking below projections and have been redacted for guidance as announced by Walgreens CEO and CFO.
In order to meet CAGR.. changes need to be made in Walgreens operations, cost structure and cash on hand.
That CAGR was discussed in the Paris meeting with Walgreens and AB.. a meeting that have never been reported to the rest of Walgreens shareholders.
Will this inversion benefit Walgreens in the long run, some folks don't think so as Wmt, Cvs, Rad and other retailers will use this against them in marketing to the USA medical insured customer..
It also might bite them with the PBM's that have mail order options..
So risk has increased for the stock holders..
So sending 17 billion of USA taxpayer funds to a Country that depends on the USA under Nato is fine ..
And stripping USA assets though debt is OK too.
And lets not talk about the USA spending under the ACA Healthcare that is putting the USA on par with this tax haven and every other industrialize nation to provide service for its citizens, that is not important.
So Switzerland manufactures Cheese from the USA's Wall-streets cows and then wants our support when Russia intrudes its air space.
Oh, how about USA education and research spending , we don't need that also.
What we need is lower taxes on Corporations, those poor folks who fly in private jets, stay in luxuary hotels eat lobster or steak and attend business meetings to pound there chests while playing a round of Golf..
all tax deductible under GAAP.
I pay my USA taxes and don't try to become an expat and taking USA workers money.
Another problem has emerged for Hertz , this has not be reported to the SEC yet for a extention in filing.LOL
As Hertz is working on producing its Financial reports.. a alligator came along and ate the dog that ate Hertz financials.. LOL..
Well perhaps the SEC can get this report before 2015..
All foreign based Corporations pay some taxes in the US made on profits less debt..
What they do not pay the USA in taxes on is FOR the profits made away from the USA shores.
these profits go into the country where they are incorporated.
This is why debt is loaded on the USA subsidiary, Debt is deducted from earnings under GAAP rules.
This provides more cash/leverage going into to the tax haven Country.
re read the tax profits example..
Walgreen financial staff will see workforce reductions, as you state, the focus will be in global expansion which Walgreens finance has no experience in.
As for Walgreens legal staff, they too will see a reduction as who needs two legal teams for 1 company.
Looking forward with Mr. Pessina in charge and his expertise in Wholesale operations, it would not surprise anyone that He moves into a franchise system for Walgreens lower preforming store operators.
This is all about ROI.
As I have stated and also Alliance Boots has commented on, retail Rx operators are facing new competitors in the sales of Drugs.
Controlling Rx wholesale distribution is now out of Walgreens hands and in the hands of ABC and Wbad..
Walgreens has played out its very limited options for control and moving into the 2nd step only seals the control of Walgreens for Mr. Pessina.
Should this M&A not move forward walgreens credit ratings with a loss in revenue will take a hit and the selling price will reflect this..
That is my outlook
AbbVie receives funding commitments in the billions for the purchase of Shire, IMHO within the lending agreement for funding is that Abbv will move to a tax Haven.
The ability of AbbVie to repay this debt is based on unseen synergies and unproven rate increases, other wise know as layoffs, reorganization in management and price increases for drugs.
Wall-street has set revenue targets for 2015-2018 which if not met, Wall
street will increase it charges for funding these loans and require assets to be sold off..
Its just business.
Bond you need to understand that a tax inversion is about a corporation leaving the USA and reincorporating in a country that offers lower taxes.
As for Apple it still is an American corporation, So you can keep your eyephone.
Consider this low cost access option
1) round trip ticket to Egypt $1,200
2) 5* hotel accommodations 4,000
3) Full Sovaldi treatment cost $900.00
Welcome to the next generation of cost reductions provided by the board of medical tourism.
All this for the all inclusive price of $6,000 USA Dollars
This is from the Tax profits page
For example: Assume a U.S. corporation has a $1 billion bank loan and pays 5% interest on the loan. The U.S. corporation is entitled to a $50 million deduction for its interest payment on its U.S. tax return. If the U.S. corporation engages in an inversion and then the parent assumes the bank loan and then reloans the funds to the U.S. subsidiary at 6%, the U.S. corporation now has a $60 million interest paid deduction and the foreign parent receives $60 million, $50 million of which is used to repay the bank. Thus, there has been a $10 million tax-free transfer from the U.S. subsidiary to its foreign parent, although the substance of the loan has remained the same (the U.S. company received a $1 billion loan both before and after the inversion.2
This earnings stripping strategy can apply to all types of transfer payments from the U.S. subsidiary to its foreign parent, including license and royalty fees, overhead and administration costs, research and development costs, labor costs and expenses. Although U.S. tax law attempts to reign in the most abusive transfer payments, transactions structured under an arm's-length business standard can still provide plenty of opportunities to shift income away from the U.S. subsidiary to the foreign parent.
Having a better understanding of What a Tax inversion means to investors holding creates a level trading environment.
1) did Walgreens set up a foreign corporation yet?
2) did Walgreens sign a Contract for exclusive Rx distribution services to a 3rd party?
3) did Walgreens borrowed billions to purchase a 45% stake in Alliance Boots?
4) did Walgreens agree to pay billions more for the rest of Alliance boots?
There you have it.. the transfer of assets right under you nose.
OCR is being held on the balance sheets of these large institutional Investors as a positive holding, so I would not expect them to sell off so soon.
As for the trading volume, this is less that 500 million dollars which is not much considering the loss these Institutions would record should this price go to fair market value.
The new CEO is a Wall street muppet( read his Bio.). so don't expect much from new business coming in.
look for the sales of assets and joint ventures announcements.
That is how Wall-streets consultants work to boast selling price and play the spread.
The healthcare sector is hot and that is What Wallstreet is playing as they will sell this into Retirement funds, 401k investors and clueless investors..
Should you chose to play options this is where you can make some money and still own your position. Seek out some professional advice on the option play as long as you are equipped with the financial facts and understanding financial engineering as this is What Wall street does best.
I will dig into their financials and see what can be done as for financial engineering.
Well I'm not paying Walgreens share of USA taxes and neither should any other America citizen.
In your view all American corporations should leave the USA for lower taxes.
As I recall Walgreens tendered a buyout offer to Alliance Boots who is based in the lower tax based Country,
So where did Walgreens get all this buy-out money? if they are taxed so badly.
Walgreens funding came from the USA, the strongest financial system in the World like JPM, GS, BAC and they all are USA tax payers.
The facts are!!!, Walgreens has missed its Quarterly earnings on net revenues for at least 5 quarters, and also has underachieved on its revenu based on Industry growth in this sector, which is becoming more fragmented as other retailers are moving into their business.
Walgreens has also been selling off its investor owned assets for the last 3 years and it has relied on keeping its long term property leases off of its balance sheet, which is legal and misleading for its long term debt obligations and debt metrics.
Moving Walgreens to Switzerland will not help its poor management, and if you read the analysts reports/notes a management change in leadership was called for.
Alliance Boots operates in 26 foreign countries, I believe, and there is no way Walgreens Management has the legal, social, or financial skills to take over this global operation.
So, the odds are you get your tax inversion, but don't count on Walgreens not taking on a huge amounts of Debt to go after Global expansion,.
Walgreens secured lenders and management will receive a larger portion of this revenue and its stockholders will be wishing the foreign held assets would be retuned into its dividend..
GL to the retail investors.
I am not suggesting that GILD will not meet the next 2-3 quarters earning.
What I have been saying is the high selling price has been baked in and unless a new drug in development gest approved of goes into production, The selling price will trade around these levels or less should the US congress chooses to set Sovaldi's selling price which they can do...
At which point This stock will sink like the Titanic..
As a long time holder of this stock, there is no reasonable excuse why this stock is trading at such a poor level compared to all the pharma stocks out there, except the facts that management its BOD's and the securitized holders of debt plan on seeing this company go under, only to reincorporate with the courts blessing leaving us the common Stock holders with nothing.
The reason I post about licensing is there are many why that DSCO could be bring in revenue on its products developed and in development.
Yet we here nothing on these approaches to bring in revenue.
Gilead HIV drug is nothing more than an alternative treatment option. for HIV viral suppression.
Seeing as this HIV drug ended trial results in Feb 2014 and no announcement has been made as yet, Placing hopes in a me too drug is not what a Investors does as its reimbursement and manufacturing cost structure is unknown.
As for a Quarterly report you must be aware the Large investment houses look out 3 to 6 month for earnings, and news is coming in that Gild will have trouble seeking its projected pricing for Sovaldi.
Now if you have uncovered new information I'm sure everyone would like to here it..
As for being high I would think you need to look at Gild selling price and make that decision free from stimulants.