Updated, 8:43 p.m. | The Walgreen Company is said to be near a deal to take over the British pharmacy retailer Alliance Boots, but through a plan to do so without moving its corporate headquarters abroad.
The American retailer is closing in on a deal to buy the 55 percent of Alliance Boots that it does not already own, a person briefed on the matter said Tuesday. But the transaction, which could be announced as soon as Wednesday, will not include a move to relocate Walgreen’s corporate citizenship to a lower-tax country.
Such a move, known as an inversion, has been increasingly under political scrutiny. And it would have required a renegotiation of an existing deal agreement with Alliance Boots, something the British retailer was unwilling to accommodate, this person said.
The full takeover would be the final chapter in a complicated deal struck by the two companies in 2012. Under the terms of the deal, Walgreen bought 45 percent of Alliance Boots and retained a three-year option to pursue a full purchase.
Walgreen has also been under pressure from large shareholders like the activist hedge fund Jana Partners to address declining gross margins in recent years.
To address such shareholder concerns, Walgreen’s chief executive, Gregory D. Wasson, acknowledged that the company was studying ways to cut its taxes, such as by restructuring its deal with Alliance Boots so that the combined company could be based outside the United States.
In recent months, a number of pharmaceutical companies like AbbVie and Mylan have announced inversion deals that would allow them to move their headquarters to countries with lower corporate tax rates, like the Netherlands and Ireland. These inversions take advantage of clauses within the United States tax code that allow corporations, under certain circumstances, to merge with a foreign counterpart and relocate their headquarters.
Such companies escape tax rules that require American corporations to pay taxes on profits earned elsewhere, making it easier for them to bring cash from overseas into the country. They would still pay taxes on profits earned in the United States.
Shares in Walgreen fell more than 4 percent on Tuesday afternoon after Sky News of Britain reported that the company would not be undertaking an inversion.
Representatives for Alliance Boots and Walgreen were not immediately available for comment.
Inversions, however, have drawn the ire of the White House and lawmakers in Washington, who have described the tactic as unpatriotic tax-dodging and akin to renouncing one’s citizenship. Treasury Secretary Jacob J. Lew said on Tuesday that the Obama administration was considering ways to halt the practice without requiring new legislation.
Walgreen, based in Deerfield, Ill., itself has faced a growing chorus of criticism over the possibility of it moving its headquarters overseas to somewhere like Switzerland, where Alliance Boots is based.
Companies and deal makers have defended inversions as perfectly legal and a consequence of the United States’ complicated tax code. Not taking advantage of the maneuver, they say, leaves American corporations at a disadvantage to foreign competitors who pay lower tax rates.
Investors, including a number of prominent hedge funds, have pressured Walgreen for months to consider changing its corporate home to reduce its tax bill. At least one other shareholder — the CtW Investment Group, which owns less than 1 percent of Walgreen’s shares — has opposed such a move, however.
The company has also made several leadership moves in recent weeks to address shareholder calls for change.
On Monday, Walgreen said Wade D. Miquelon, chief financial officer, would be replaced by Timothy R. McLevish from the Kraft Foods Group. And in July, Kermit R. Crawford, the president of Walgreen’s pharmacy, health and wellness units, announced his retirement after 31 years at the company.
A merger with Alliance Boots could also give more power to Stefano Pessina, Alliance Boots’ executive chairman, to drive changes at Walgreen. Mr. Pessina, who helped broker the 2012 Walgreen deal with Kohlberg Kravis Roberts, has been credited with helping improve Alliance Boots’ nonpharmacy business, lifting sales through the marketing of its own branded products, including its No7 line of beauty products.