Alliance Boots

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Alliance Boots plc

Type	Public (LSE: AB.)
Founded	Alliance Boots 2006 Boots 1849 Alliance Unichem 1997
Founder	John Boot - Boots Merger - Alliance UniChem
Headquarters	London, England, UK
Key people	Richard Baker - Chief Executive Sir Nigel Rudd - Chairman
Industry	Pharmaceuticals Healthcare Beauty
Products	Boots Alliance Pharmacy No 7 - Makeup Soltan - Sun cream Almus - Generic Drugs
Revenue	No Figures
Operating income	No Figures
Net income	No Figures
Employees	~100,000
Subsidiaries	Boots Alliance UniChem
Website	http://www.allianceboots.com

Alliance Boots plc (LSE: AB.) is a British based pharmaceuticals company, operating as a high street retailer, pharmacist and pharmaceuticals wholesaler. Alliance Boots is the dominant pharmacy chain in Britain with a 17% market share^[1]. Retail operations are carried out under the Boots The Chemist and Alliance Pharmacies brands^{Note 1}. Alliance Boots is also the largest pharmaceuticals wholesaler in the UK through their UniChem subsidiary with a 40% market share. Alliance Boots are a constituent of the FTSE 100. ^[1]

As the third largest pharmacy chain in Europe, Alliance Boots employs around 100,000 staff and operates around 3,000 retail stores, around 2,700 of these have pharmacies. Around 380 depots support this retail network. Alliance Boots is headquartered in London, England. In terms of retail space, Alliance Boots ranks as one of the largest high street retailers in the UK.

As of November 2006 the board of directors are:^[2]

Sir Nigel Rudd - Chairman
Stefano Pessina - Executive Deputy Chairman
Richard Baker - Chief Executive
George Fairweather - Group Finance Director
Ornella Barra - Wholesale and Commercial Affairs Director
Steve Duncan - Community Pharmacy Director
Scott Wheway - Managing Director.
Guy Duncan - Senior Non Executive Director
Adrian Loader - Non Executive Director
Tim Parker - Non Executive Director
Hélène Ploix - Non Executive Director
Patrick Ponsolle - Non Executive Director
Manfred Stach - Non Executive Director

Main article: Alliance UniChem

Main article: Boots Group

Alliance Boots was formed following the merger of a British company, Boots Group PLC, and a pan-European company, Alliance UniChem Plc.

Alliance UniChem was formed at the end of 1997, when Alliance Santè S.A. merged with the UK company UniChem PLC to form Alliance UniChem Plc, and between 1998 and 2006, Alliance UniChem expanded into additional markets throughout Europe and Russia with a widespread program of takeovers, resulting in the company expanding and entering the FTSE 100 share index in 2002.

Alliance Santè stems from Alleanza Salute Italia, which was founded in 1977 by present Alliance Boots Executive Deputy Chairman Stefano Pessina. Through his investment vehicle Alliance Santè Participations S.A, Pessina now owns just under 15% of Alliance Boots plc (some 145,300,000 shares) together with 299,108 shares Pessina holds personally. Ornella Barra, Stefano Pessina's partner and director of Alliance Santè Participations S.A owns 559,021 shares. Taken together, the couple own 15.106% of Alliance Boots plc.

Boots The Chemists was founded in 1849 by John Boot and has remained an independent company from its inception through to the merger with Alliance UniChem. Boots has pursued unsuccessful strategies in pursuit of growth, such as locating Boots stores within larger Sainsbury’s out of town supermarkets ^[3] at one point even considering the sale of sex toys in Boots stores.^[4].

In October of 2005, it was announced, after a short period of speculation amongst financial analysts, that Boots would merge with Alliance UniChem in a deal valuing both companies equally and said to be worth around £7 billion GBP ^[5] 3rd October 2005.

The merger process completed without any major intervention from the Office of Fair Trading on Monday July 31, 2006, although 96 shops were sold to comply with a condition laid down by the OFT. Technically, the merger was in fact a takeover by Boots, with Boots Group PLC - the holding company of The Boots Company PLC - acquiring the entire share capital of Alliance UniChem and issuing 1.332 Boots Group PLC shares for every 1 Alliance UniChem share held.^[6] Upon completion of the process, Boots Group PLC renamed itself to Alliance Boots plc. The benefit of this process allowed The Boots Company PLC and Alliance UniChem Plc to remain intact under one parent company, and eliminating time consuming and expensive legal work which would have been necessary to merge the two companies together into one new company.

Following the merger process, former Boots Group shareholders hold 50.2% of the new company, with former Alliance UniChem shareholders holding 49.8%.^[6]

Despite the Office of Fair Trading not imposing any restrictive conditions on the deal, the merger only received final approval in February 2006 after the Competition Appeal Tribunal rejected rival firm Celesio's challenge to the deal. Celesio own the Lloydspharmacy Chain.

Alliance Boots operations are split into two areas, Retail and Wholesale.

A typical Boots store in the UK

Main article: Boots The Chemist

Interior of a Boots store

Boots The Chemist forms the backbone of Alliance Boots retail operations, with all retail outlets planned to carry the Boots brand in future.^[7] Boots has a history stretching back over 150 years and is a familiar site on Britain's high streets.

Boots outlets are typically larger than those of Alliance Pharmacy, often occupying prominent high street / city centre locations. Most branches have a pharmacy (only 300 of 3000 stores do not) and focus on healthcare, personal care and [cosmetic]] products, with most stores selling over the counter medicines, many stores also feature traditional photo processing and/or a Kodak picture kiosk where users of digital cameras and camera phones can create professional quality prints. Larger stores usually offer a range of electrical equipment such as hairdryers, curlers and foot massagers, whilst selected stores often offer a range of sandwiches, baguettes, wraps, salads and beverages.

Over the last 3 years, Boots has opened 48 larger out of town stores^[8] to compete with out of town supermarkets and electrical outlets, over the past few years, Boots have suffered intensive competition from the major supermarket chains, especially Tesco and ASDA stores featuring a pharmacy and photo processing area, and electrical retailers such as Argos and Dixons selling photographic and beauty electrical items.

Boots Healthcare - larger stores typically offer a variety of healthcare services, such as flu vaccination, Cholesterol screening, weight loss advice, hair retention treatment, smoking cessation advice and products, and Chlamydia testing & treatment (private service). Optician services are also offered in many larger stores, with Boots providing eye tests along with the sale of spectacles and contact lenses. Boots supplied 800,000 pairs of spectacles in 2005/2006^[9]

Boots has a well developed internet site www.boots.com which allows online shopping in the United States in North America, Finland, Iceland, Norway, The Netherlands, Switzerland, Romania in Europe, Russia, Taiwan and Hong Kong in Asia and New Zealand in Australasia. The United Arab Emirates, Kuwait, Thailand and Indonesia will be served by Boots online operation sometime in the future.^[10]

Advantage Card - billed as the most generous customer loyalty card in Britain, Boots Advantage card has 15,000,000 regular users^[11] and users earn 4 points (worth 1p each, so 4p per £1) for every £1 spent. (In Ireland, users earn 1¢ for every €1 spent).

Alliance Pharmacies are typically smaller shops^[12] focusing mainly on filling prescriptions, selling healthcare products and providing medical advice. Alliance Pharmacies tend to be in less prominent locations, closer to GP surgeries or located in housing estates rather than town centres, in locations more suited to the needs of those needing prescriptions and over the counter medicines. Alliance Pharmacy stores are to be re-branded to Boots stores, although no time frame has yet been given. It's unclear as to whether a sub-brand such as Boots Local will be used for these smaller stores. ^[7]

E.Moss Limited was acquired by UniChem in 1991 and through 2005 was re-branded as Alliance Pharmacy. Any remaining Moss Pharmacy stores will be re-branded as Boots along with the Alliance Pharmacy stores.

Alliance Boots operates a further 400 pharmacies in Norway, The Netherlands, Thailand, Republic of Ireland, Italy and Switzerland (through an associate) and has a presence in various other countries such as Russia, Romania, Iceland, New Zealand, Canada and the USA through implants in other major retail partners.^[11]

Boots Manufacturing is the manufacturing subsidiary of the Boots Group and manufactures a range of own brand and third party cosmetic products, including the No 7, Kangol, Toni & Guy, FCUK, Soltan and Botanics ranges of cosmetics. Some are sold through Boots outlets whilst others are sold through third party stores such as French Connection. Boots Manufacturing has plants in the UK, Germany, France and Poland. Boots Manufacturing also produces Boots, No 7 and Soltan products for sale through outlets in North America.

UniChem is the backbone of Alliance Boots wholesale and distribution service, with twice daily deliveries to around 5,700 pharmacy shops in the UK alone. Internationally, Alliance Boots distributes drugs and cosmetics to around 125,000 outlets and operates from 380 delivery depots. ^[11]

In addition to supplying Alliance Pharmacies, the Alliance UniChem distribution subsidiaries also deliver to NHS central warehouses and hospitals in the UK, along with private hospitals, GP surgeries, local health centres and private pharmacies throughout Europe, Asia and Australasia.

Almus is a brand of generic prescription drugs sold throughout the Alliance UniChem sphere of operations.

Almus is an umbrella brand for the wide range of lower cost generic medicines, which by the end of 2006 will total 200 different drugs and doses. Alliance Boots has placed considerable emphasis on the design of the packaging in an attempt to reduce the number errors by the dispensing chemist and by the patient relating to incorrect dosage which can result in either a dangerous accidental overdose or an equally dangerous under dose. Almus have won numerous awards for the design of their packaging and documentation.^[13]

Alliance Boots plc is the direct parent company of The Boots Company PLC and Alliance UniChem Plc, with The Boots Company PLC and Alliance UniChem Plc remaining parent companies of their respective subsidiaries. There has been no change in the structure of either company during the merger process.

Alliance Boots plc

Alliance Boots plc Subsidiaries:The Boots Group plc | Alliance Unichem plc

Boots Group Subsidiaries: Boots The Chemists Ltd | Boots Opticians Ltd | Boots Beauty International Limited | Boots Property Limited

Annual Revenue: £13.8 billion GBP ( FY 2005) | Employees: 100,000 | Stock Symbol: LSE: AB. | Website: www.allianceboots.com

Year ended	Revenue (£m)	Profit before tax (£m)	Net profit (£m)	Basic eps (p)
31 March 2006 *	5,027.4	348.9	303.4	44.5
31 March 2005	5,469.1	427.6	302.4	40.9
31 March 2004	5,325.0	579.9	411.5	52.8
31 March 2003	5,325.2	494.9	301.6	36.0
31 March 2002	5,328.3	595.8	404.3	45.9
31 March 2001	5,220.9	492.2	333.2	37.9
31 March 2000	5,187.0	561.7	399.0	45.0