Boots, one of the UK’s venerable and iconic companies, has been the subject of two takeovers since 2007. The company appears to have retained public perceptions of its brand on the high street. Recent allegations against the parent company, Walgreens Boots Alliance, may be threatening its corporate reputation
The breaking story in the US concerns subpoenas concerning the corporate relationship between Walgreens Boots Alliance and a blood-testing company Theranos.
In the UK, the news focus is quite different. The Guardian broke the results from an investigation of mis-use of government funds by the Boots pharmacy operations:
Managers at Britain’s biggest pharmacy chain were found to be directing their chemists to provide medicine-use reviews (MUR) to customers who didn’t need them, in order to claim public money from the NHS (National Health Service) which pays £28 for each MUR, which is carried out by a pharmacist and intended to give patients professional advice on health, diet and how best to manage their medicines.
The Guardian has also seen a recent unpublished survey by the trade union, the Pharmacists’ Defence Association (PDA), to which more than 600 Boots chemists – more than one in 10 of the entire company’s pharmacists – responded. Asked “how often do you believe financial cutbacks imposed by your main employer have directly impacted upon patient safety”, over 75% of Boots chemists said that was true “around half” or more of the time. A number volunteered complaints about being “pressurised into conducting MURs whether or not patients are eligible to receive the service” and “Boots keeps asking me for more MURs”.
As subscribers to LWD will know, we have followed the fortunes of the iconic company over two takeovers in the last decade.
The first takeover (2007)
The first takeover in 2007 was seen as a bloodless coup:
Cherished British Drug company Boots merges with European partner, whose wealthy owner, Stefano Pessina, becomes deputy chairman in the new company, Alliance Boots.
The amicable arrangement suggested that in any leadership transition, Mr Pessina would be a cuckoo in the nest. In short order, chairman Sir Nigel Rudd resigned. further friendly discussions were followed by a takeover by private equity firm KKR. The move was presented openly as a vehicle which would install Pessina as its main driver.
KKR and Stefano Pessina had made it known that they wanted to keep the top team intact. But for all the continuing expressions of good will, the inevitable was to happen.
Thursday July 12th 2007, Richard Baker decided to accept a severance deal that would be worth some £10 million. It seems as if they made an offer for him to stay, or decline with honour
The second takeover (2014)
The second takeover is far from complete. This time it is with the mammoth American firm Walgreens, and was initiated in 2014
Walgreens Boots Alliance, has the new Nasdaq label WBA. [not to be confused with WBA, aka The Baggies, or West Bromwich Albion, another venerable brand in England, and a midlands- based Football club.] The merger was suggested to have been imposed on Walgreens by impatient shareholder activists.
The change had more executive bloodshed on the Walgreen side. The veteran Stefano Pessina of Boots Alliance again became the most obvious winner, just as he was when he engineered the Merger of Boots with his own Swiss-based operations earlier. The financing of the deal cost Walgreens five billion dollars plus shares.
National and International Issues
In the UK, liberal regulations encourage international takeovers, where investment and efficiency gains are prized until collateral damage to employees becomes contentious.
Only then is the rhetoric of corporate social responsibility really tested.
The case of Tata steel is still rumbling on. The Indian conglomerate Tata, hailed as a saviour of the aging British Steel Industry, announced closure of its UK operations. Tataa became the scapegoat for closures resulting from the global over-production of steel.
So far, ‘Boots the chemist’ has retained its positive image in the eyes of the public, long after Boots as a corporate identity exists as little more than a convenient product brand. (Compare the national standing of Cadburys, another mythical beast masquerading as a much-loved national manufacturer of chocolate goodies).
I still think ‘Boots’ not ‘Alliance Boots’, just as I think ‘Manchester Business School’, when the new name is the ‘Alliance Manchester Business School’.
Ideas and cultures hang around a lot longer than brinks and mortar.