The announcement that Boots and Alliance UniChem are to merge has sent a ripple of excitement through the city. Some say it's a total mismatch while others say it’s a marriage made in heaven.
The combined company will be worth around £6 billion and will be four times the size of its nearest competitor. The absence of serious competition in some areas may cause the proposed organisation some problems with the Monopolies, Mergers and Acquisitions regulator.
The deal, still subject to the agreement of the shareholders, has been described as a merger but it is in effect an acquisition of UniChem by Boots. Boots chief executive, Richard Baker and chairman, Nigel Rudd will run the new company, Alliance Boots, in their current roles.
This development may provide Boots with the growth potential that it has been searching for. UniChem’s international wholesale business will offer a platform from which to expand into Europe and its village shops will offer diversification from the traditional high street location.
Boots, like other high street retailers, has been struggling against economic down-turn and low consumer spending. It has also had to face fierce competition from supermarkets selling own brand over-the- counter drugs at very low margins. This merger will offer Boots an opportunity to sell at a local level where price competition is less intense.
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