* Third quarter adj earnings $0.91/shr vs est $0.94
* Raises estimate for synergies with Alliance Boots by $25
* Shares fall as much as 2.7 pct
(Adds CEO, analysts comments, graphic link, background; updates
By Shailaja Sharma
June 24 Walgreen Co, the largest U.S.
drugstore operator, withdrew its profit and revenue forecasts
for 2016, saying it had yet to work out several aspects of its
planned acquisition of European drug retailer Alliance Boots
Walgreen, which bought 45 percent of Alliance Boots in 2012,
said it would update investors about the proposed purchase of
the rest of the Europe's largest pharmacy chain owner and issue
a new forecast by late July or early August.
The company, whose shares fell as much as 2.7 percent on
Tuesday, also reported a lower-than-expected quarterly profit
due to a slowdown in the introduction of high-margin generic
drugs and lower reimbursement by insurers.
Walgreen has finally acknowledged the fact that targets for
2016 were overly ambitious, Ross Muken, senior managing director
and partner at ISI Group LLC, told Reuters.
Both businesses have not performed as expected, he said,
adding that the deal would likely go ahead.
Walgreen, which has an option to buy all of the
Switzerland-based company in 2015, had forecast 2016 combined
revenue of $130 billion and adjusted operating income of $9-$9.5
billion when it bought a stake in Alliance Boots.
"Most investors have believed for a while now that the goals
were less likely to be obtained," UBS Equities analyst Steven
Valiquette wrote in a note.
Walgreen Chief Executive Greg Wasson said management was
working on the timing and structure of the deal as well as on
how to combine management teams, cut costs and work out
potential changes in the company's capital structure.
The company has been under pressure from some shareholders
to do so-called "tax inversion" deal with Alliance Boots that
would shift Illinois-based Walgreen's tax domicile overseas and
reduce its tax bill.
Walgreen did not directly address the issue in its
post-earnings conference call. But Wasson said the structure of
any deal would be assessed for what it could do "as far as our
effective tax rate."
Walgreen raised its cost savings estimate from the existing
partnership this year by $25 million, to $400-$450 million.
THIRD QUARTER FALLS SHORT
Helped by a lower tax rate, Walgreen's net income rose about
16 percent to $722 million, or 75 cents per share, in the
quarter ended May 31, from $624 million, or 65 cents per share,
a year earlier.
Excluding items, the company earned 91 cents per share,
falling short of the average analyst estimate of 94 cents,
according to Thomson Reuters I/B/E/S.
Sales rose 5.9 percent to $19.40 billion, below the average
estimate of $19.48 billion.
Walgreen, whose competitors include Rite Aid Corp
and CVS Caremark Corp, said customer traffic fell 0.7
Walgreen's shares were down 2 percent at $72.23 on the New
York Stock Exchange. They have gained about 12 percent since the
company reported quarterly results in March.
(Additional reporting by Sweta Singh in Bangalore; Editing by
Sriraj Kalluvila and Don Sebastian)