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Patronize Walgreens

August 6, 2014

Wall Street killed Walgreens in part due to their decision not to exploit tax avoidance strategies employed by other companies.  Walgreens, like Market Basket, has placed ethics above profits and should be applauded.  Walgreens is my pharmacy and should be yours too!

from USA Today

Addressing the issue of whether Illinois-based Walgreens should shift its headquarters overseas as part of the deal with Alliance Boots, Wasson said officials and expert advisers at both companies carefully analyzed the potential risks involved.

Such a shift is known as a corporate tax inversion. It’s being considered by at least a dozen U.S. companies, because reincorporating in lower-tax locations overseas is one way to significantly cut the annual cost from the 35% top business tax rate in the U.S.

But Wasson told analysts Walgreens’ assessment found the potential risks of a headquarters shift “included potentially putting the company in a significantly worse position than if we had  not inverted at all, such as a protracted controversy with the IRS” and possible “litigation which could go on for three to 10 years” significantly complicating “everyday business planning.”

Walgreens also weighed the “harder to quantify” but equally significant risk of  “consumer backlash and political ramifications , including the risk to our government book of business,” said Wasson, referring to the millions of dollars in revenue the company gets from federal Medicare and Medicaid programs.

In a separate statement issued with Wednesday’s announcement, Wasson said “the company also was mindful of the ongoing public reaction to a potential inversion and Walgreens’ unique role as an iconic American consumer retail company.”

“In the end, the parties could not arrive upon a structure that provided the level of confidence required by the (Walgreens) board to ensure that the transaction could withstand almost certain intense protracted IRS scrutiny,” Wasson told analysts.

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