BOOTS Healthcare International
It’s pointed out that the other company, which is inching towards the deal, is Alliance UniChem, which has an estimated market worth of nearly 3.2bn. The company conducts extensive wholesale operations all over the UK, Netherlands, Norway &. Italy in the field of Drug Trade with the presence of nearly up to 1200 pharmacies throughout these countries. Over the last one year, the de-regulation of the market in the Pharmaceutical Sector has resulted in a stiffer competition in the high street market among retailing companies. Companies and Supermarkets now have the liberty to set up in-store pharmacies, which poses a danger to key pharmaceutical players like BOOTS and Alliance.
In an analysis published in biotech-info.net- "Due to the softening of rules and the law, BOOTS is facing stiff competition from other pharmaceutical retailing majors such as TESCO, which enjoyed and continues to enjoy a place of dominance and monopoly in the market". Tougher competition from the supermarkets has forced Mr. Baker of BOOTS to cut the price of his products in an attempt to prop up the so far lukewarm sales, although this has put some further pressure on the profit and operating margins. As such, both the firms have decided that it is time to join hands in order to compete effectively in the market and also to improve upon their current individual deficiencies. The present deal is expected to give the new firm an industry share of nearly up to 20%. But the present deal has been met with a lot of speculation especially from the institutional shareholders who generally regard such nil-premium mergers with skepticism. The companies, therefore, intend to seek support for the deal by outlining the capacity of the new merged outfit’s capacity to generate significant cost and purchasing synergies and boost .margins.