Walgreens profit rose 16% to $722 million in the fiscal third quarter. Associated Press
Walgreen Co. 's Chief Executive Greg Wasson on Tuesday said for the first time that the company is weighing moving outside of the U.S., as it considers buying the shares it doesn't already own in European pharmacy Alliance Boots GmbH.
Under pressure from shareholders to use a merger with Alliance Boots to cut its tax bill through a so-called inversion, Mr. Wasson said the company is looking at how to structure its tax liabilities as part of its discussions over whether to buy the remaining 55% of Alliance Boots it doesn't already own.
Walgreen, based in Deerfield, Ill., plans to hold a conference call in the coming weeks to lay out its plans."We're looking at all and everything," Mr. Wasson said in response to a question about inversions from an analyst on a conference call. He said the company is looking at the tax structure and "what the structure could do as far as our effective tax rate."

Inversions have been gaining popularity of late as American companies seek to lower corporate tax rates and to keep cash earned overseas out of the reach of U.S. tax authorities. Pharmaceutical companies have led the recent flurry of the inversion activity and it would be rare step for a U.S.-based retailer to move abroad.The company is also considering other issues, such as the timing and the structure of a deal to obtain the remainder of Alliance Boots, but investors have been focusing more on whether Walgreen can lower its tax bill by relocating its corporate home overseas to Switzerland, where Alliance Boots is based.
Mr. Wasson as recently as March had sworn off considering doing an inversion. "Just to reiterate, as I said on the last call, we have no plans to do an inversion," he said on aMarch 25 earnings call. But other executives softened that stance in more recent public comments, saying that a move is something the company would consider.
Pressure could rise for such a move after Walgreen reported weaker-than-expected earnings, as margins in its pharmacy business were squeezed by higher prices for generics and lower reimbursement rates. With Alliance Boots also not increasing profit as fast as expected, Walgreen had to scrap its 2016 financial guidance. The company also now expects to wring more cost out of the partnership, as it makes spending cuts and combines operations.
Walgreen spent $6.7 billion in 2012 to buy 45% of Alliance Boots, with the option to buy the entire company before 2016.
For its fiscal third quarter ended May 31, Walgreen's profit rose 16% to $722 million from a year earlier, while revenue rose 5.9% to $19.4 billion. Sales, excluding newly opened or closed locations, rose by 4.8%, even as customer traffic slowed, helped by bigger basket sizes and better pharmacy sales.
Walgreen will also lay out new financial targets for the combined company at a meeting in late July or early August.