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The Financial Times reports that Walgreens management is under pressure from some shareholders to relocate its corporate headquarters to Europe, a move that could save it significant tax exposure - a concept called "inversion."

It would, in fact, be one of the largest tax inversions ever attempted, the story says.

"At a private meeting in Paris on Friday," FT writes, "investors owning close to 5 per cent of Walgreens’ shares lobbied the company’s management to use its $16 billion takeover of Swiss-based Alliance Boots to re-domicile its tax base … The investor group, which included Goldman Sachs Investment Partners and hedge funds Jana Partners, Corvex and Och-Ziff, requested the meeting after becoming frustrated by Walgreens’ refusal to consider relocating, according to people familiar with the matter.

"In a note last month, analysts at UBS said Walgreens’ tax rate was expected to be 37.5 per cent compared with 20 per cent for Boots, and that an inversion could increase earnings per share by 75 per cent. They added, however, that 'Walgreens’ management seems more hesitant to pull the trigger near-term due to perceived political risks'."

While Walgreens management may be resistant, FT reports, the Paris discussions were characterized as "constructive."
KC's View:
I recognize the tax problem. But Walgreens risks an enormous political blowback if it becomes a European company. Just as, I'd expect, there could be political blowback against governmental policies that force such a high-profile entity offshore.