Well, the thugs and bullies in the White House and on Capitol Hill have scored another victory — if you can call it that — over a major American company.
After a month of assaults and threats from the D.C. political class, venerable drug retailer Walgreen Co. announced it will remain headquartered in Illinois for the time being instead of entering a tax-inversion merger with Europe’s Alliance Boots that would move it abroad to lower its tax bill.
Good news for Washington, but the millions of Walgreen shareholders aren’t partying it up.
Walgreen lowered its expected earnings about 20%, or nearly $2 billion, annually by 2016. Shares of Walgreen buckled as much as 8.5% after its news hit the tape Tuesday afternoon, and gapped down an additional 17% at Wednesday’s open before closing at $59.21, off $9.91, or 14%, on 13 times average volume.
Congratulations, Washington: You just liquidated more than $9 billion in shareholder wealth.
Deerfield, Ill.-based Walgreen was looking to save an estimated $4 billion on its taxes over the next five years through that deal. Walgreen will still buy the remaining 55 percent of Alliance, but it won’t move forward with the tax inversion.
Dozens of major American companies have adopted this corporate inversion strategy in recent years to avoid America’s world-high 35% corporate tax.