US drugstore chain Walgreens could buy Alliance Boots earlier than scheduled and move its base to the UK as it aims to save tax.
Walgreens is eyeing a £10.5bn takeover of Alliance Boots. It already owns 45% and is set to fully merge next year when the window opens in February.
But it could bring the deal forward which would enable the business to move its tax domicile to the UK or Switzerland and make billions of dollars in savings annually.
It comes as Pfizer, the American drug giant, is already trying to buy its UK rival Astra Zeneca.
Boots UK head office is in Nottingham but its tax domicile is in Switzerland.
The move by Walgreens is known as ‘tax inversion’ and has been used by a number of US companies since the economic crisis hit, according to the Sunday Times.
Walgreens is examining the plan under mounting pressure from hedge fund investors with a 5% stake in Walgreens.
Walgreens’ shareholders’ proposals, led by Jana Partners, were submitted to Walgreens and Alliance Boots executive chairman Stefano Pessina last month.
Walgreens’ tax rate is 37.5% against 20% for Alliance Boots, according to analysts at UBS. Alliance Boots has been criticised by campaign groups for paying too little tax in the UK.
But Alliance Boots has defended its tax payments, saying it is one of the biggest contributors to the Treasury.
Walgreens is also understood to be wary that the deal could be contentious in Washington where many politicians are concerned about the growing number of large companies moving their tax base overseas.