Walgreen considering move to Europe for leaner taxes?

[glenn1]

Perhaps this is the beginning of the exodus. Some people have been actively calling for "the rich" to leave the U.S. because they aren't paying what they consider a "fair share." Perhaps soon they'll get their wish. At the very least it's a breach of fiduciary duty for the company to remain headquartered in suburban Chicago and subject to the whims of city and state laws and taxes.

http://www.businessweek.com/articles/2014-04-14/should-walgreen-move-to-europe-for-leaner-taxes

In the American pantheon, there’s baseball, apple pie, and a Walgreens (WAG) drugstore on nearly every other corner. Yet an investor group wants to persuade the Midwestern stalwart to relocate to Europe as a way to reduce its corporate tax burden.

Three hedge funds and a Goldman Sachs (GS) investment fund want the 113-year-old pharmacy chain, based in suburban Chicago, to consider a tax “inversion” and move to Europe, as the Financial Times reported today, citing unnamed sources. Walgreen Chief Executive Greg Wasson and the company’s chief financial officer met in Paris last week with a hedge fund group that wants the company to leave Illinois for what would most likely be Switzerland, which has lower tax rates. <snip>

 

[zinfamous]

yeah, they're worried about business taxes here, and the thought of moving to Europe?

lol sure.

 

[Texashiker]

Perhaps this is the beginning of the exodus.

The exodus started in the 1970s. First it was cheap labor, now it is for taxes.

Makes me wonder what the US is going to be like in 50 years? All the super rich people will leave the US for tax havens and companies will be exploiting cheap labor overseas.

The rich are not paying their fair share in taxes as it is. As a result our infrastructure is falling apart and college cost a fortune.

The future of this nation looks rather bleak.

 

[hal2kilo]

yeah, they're worried about business taxes here, and the thought of moving to Europe?

lol sure.

You can be sure the CEO is going to make big bank on the deal. That's why you become a CEO, to rake in profits...for yourself. F the company.

 

[Hayabusa Rider]

yeah, they're worried about business taxes here, and the thought of moving to Europe?

lol sure.

When all taxation is added up it might very well be cheaper than here.

 

[Texashiker]

yeah, they're worried about business taxes here, and the thought of moving to Europe?

lol sure.

Ireland is a tax haven. I think their corporate tax rate is less than 1%? Correct me if I am wrong.

 

[glenn1]

Ireland is a tax haven. I think their corporate tax rate is less than 1%? Correct me if I am wrong.

Tax haven yes, but I think the rate is around 10% not 1%. Still a small fraction of the U.S. corporate tax rate.

 

[ivwshane]

When you have nothing to offer over the competition all you have left is to maximize existing profits. Don't read anything into this other than a dying company trying to stay alive. Layoffs will probably come next.

When was the last time you went to a Walgreens?

 

[TheSiege]

American corporations dont pay that much in taxes here

http://www.forbes.com/sites/timwors...ederal-tax-apple-is-the-explanation-for-this/

http://blogs.wsj.com/cfo/2013/07/01/five-numbers-show-how-much-corporations-really-pay-in-taxes/

http://www.nerdwallet.com/investing/corporate-taxes/rates/

 

[Newell Steamer]

Ah, so with all that extra tax savings, they'll use the cash to make more jobs!!

The American worker wins yet again!!

 

[glenn1]

When you have nothing to offer over the competition all you have left is to maximize existing profits. Don't read anything into this other than a dying company trying to stay alive. Layoffs will probably come next.

When was the last time you went to a Walgreens?

Don't know exactly, mainly because to me drugstores are essentially commodity products - I would be fine going to CVS, Walgreens, RiteAid, or any other peer. But that doesn't mean that Walgreens is dying, and markets seem to believe that it's in better shape than its competitors:

http://www.macroaxis.com/invest/ratio/WAG--Probability_Of_Bankruptcy

 

[Hayabusa Rider]

American corporations dont pay that much in taxes here

http://www.forbes.com/sites/timwors...ederal-tax-apple-is-the-explanation-for-this/

http://blogs.wsj.com/cfo/2013/07/01/five-numbers-show-how-much-corporations-really-pay-in-taxes/

http://www.nerdwallet.com/investing/corporate-taxes/rates/

What is the total taxation (not just federal) that Walgreens pays? I'd say that regulatory compliance would factor into a decision to move. BTW, continuing declines in reimbursements combined with other uncontrollable expenses meant Walgreens is closing about 1k stores. Expect the trend to continue.

 

[Sonikku]

They'll think twice when they see what Europe expects them to pay their employees. The lord giveth and the lord taketh away.

 

[Oldgamer]

Perhaps this is the beginning of the exodus. Some people have been actively calling for "the rich" to leave the U.S. because they aren't paying what they consider a "fair share." Perhaps soon they'll get their wish. At the very least it's a breach of fiduciary duty for the company to remain headquartered in suburban Chicago and subject to the whims of city and state laws and taxes.

http://www.businessweek.com/articles/2014-04-14/should-walgreen-move-to-europe-for-leaner-taxes

In the American pantheon, there’s baseball, apple pie, and a Walgreens (WAG) drugstore on nearly every other corner. Yet an investor group wants to persuade the Midwestern stalwart to relocate to Europe as a way to reduce its corporate tax burden.

Three hedge funds and a Goldman Sachs (GS) investment fund want the 113-year-old pharmacy chain, based in suburban Chicago, to consider a tax “inversion” and move to Europe, as the Financial Times reported today, citing unnamed sources. Walgreen Chief Executive Greg Wasson and the company’s chief financial officer met in Paris last week with a hedge fund group that wants the company to leave Illinois for what would most likely be Switzerland, which has lower tax rates. <snip>

Walgreens got hit by the DEA several times and fined millions in fees and charges for the whole "opioid pain medication" war on drugs thing about a year or so back. I wonder how much of this could also be attributable to them wanting to get out of the states as well?

 

[SMOGZINN]

I've wondered for a while why a group of corporations don't just get together and buy a island and found their own country with no taxes on corporations, then they can just all move their corporate HQ's there.

 

[zinfamous]

Ireland is a tax haven. I think their corporate tax rate is less than 1%? Correct me if I am wrong.

Ireland had a strong boom in the early aughts with business growth--I believe mostly software development. Corporate tax rates were indeed quite low at the time and for the first time in history, you saw the Irish economy growing faster than the English economy--you actually had British folks going over to Ireland for work. crazy times.

Ireland is now in recession, I believe, and those low tax rates haven't been around for some time.

Still, when it comes to the cost of doing business anywhere in Europe--think infrastructure, resources, labor costs (holy shit, let's think about cost of labor in Europe ), local culture (most places will be closing at 5pm sharp in the majority of that part of the world), I guarandamn-tee this isn't the type of move that will lead to better profits.

as such, this is all FUD

 

[zinfamous]

What is the total taxation (not just federal) that Walgreens pays? I'd say that regulatory compliance would factor into a decision to move. BTW, continuing declines in reimbursements combined with other uncontrollable expenses meant Walgreens is closing about 1k stores. Expect the trend to continue.

what about costs of compliance in Europe? You know why McDonald's and BK and such are still somewhat rare, but also very expensive in Europe? They aren't allowed to use Grade F horse grindings in their meat, no hormones--oh, and no GMO in any product anywhere in Europe.

 

[zephyrprime]

I've wondered for a while why a group of corporations don't just get together and buy a island and found their own country with no taxes on corporations, then they can just all move their corporate HQ's there.

You don't need to do that because there is already bermuda.

Countries are going to get smart eventually and start taxing companies based upon the business they do within their borders and not care at all where the company is domiciled.

 

[ivwshane]

Don't know exactly, mainly because to me drugstores are essentially commodity products - I would be fine going to CVS, Walgreens, RiteAid, or any other peer. But that doesn't mean that Walgreens is dying, and markets seem to believe that it's in better shape than its competitors:

http://www.macroaxis.com/invest/ratio/WAG--Probability_Of_Bankruptcy

Yeah upon further research they actually seem to be doing pretty well. I guess that's what I get for using my own personal experience to base a comment on

Is Walgreens a cheaper alternative to Walmart?

 

[WelshBloke]

Companies should pay taxes where they make their money.
They shouldn't be allowed to pull off this bullshit where they shuffle all their cash to some country with a favourable tax rate where they don't really do any business.

 

[hal2kilo]

When you have nothing to offer over the competition all you have left is to maximize existing profits. Don't read anything into this other than a dying company trying to stay alive. Layoffs will probably come next.

When was the last time you went to a Walgreens?

Ding! Ding!

 

[Hayabusa Rider]

what about costs of compliance in Europe? You know why McDonald's and BK and such are still somewhat rare, but also very expensive in Europe? They aren't allowed to use Grade F horse grindings in their meat, no hormones--oh, and no GMO in any product anywhere in Europe.

The practice of pharmacy is regulated by an order of magnitude more than BK. I don't know what the TCO would be in moving however I do know that Europe does what we demonstrate we can't and that is have a more logical and straightforward system. We're comparative idiots. I'll bet you can't find where it's illegal to take a shut-in needed medical supplies in Europe. Can't say that about the US.

 

[ElMonoDelMar]

Is Walgreens a cheaper alternative to Walmart?

Oh god no. I've got one down the block from my house. Occasionally I'll be too lazy to drive 15 minutes to Walmart and will just hit up Walgreens. They're competitive on eggs and milk, but everything else is 2-3x the price what Walmart charges.

 

[TROLLERCAUST]

Ireland is a tax haven. I think their corporate tax rate is less than 1%? Correct me if I am wrong.

Tax haven yes, but I think the rate is around 10% not 1%. Still a small fraction of the U.S. corporate tax rate.

Read the posted article. Silly OP.

... Such tax inversions have been most common among specialty pharmaceutical makers, many of them setting up shop in Ireland to take advantage of a 12.5 percent corporate tax rate, compared with 35 percent in the U.S. ...

Edit: hehe

 

[Hayabusa Rider]

Is Walgreens a cheaper alternative to Walmart?

In terms of 95% of prescriptions, it's neither more or less. The difference is that Walgreens depends on making a profit, while that isn't very important to Walmart. The pharmacy is largely a draw and if it brings in more sales peripherally than it loses then it's overall more profitable to have one.