Walgreens 2014 Annual Report Download - page 37

the likelihood that the Transactions will be completed and the timing of completion, the prospects of post-
Transactions operations and synergies, the effect of any conditions or restrictions imposed on or proposed with
respect to Walgreens Boots Alliance by regulatory agencies and authorities, general market and economic
conditions and other factors. In addition, it is impossible to predict accurately the market price of Walgreens
Boots Alliance common stock to be received by Walgreens shareholders after the completion of the
Reorganization. Accordingly, the price of Walgreens common stock on the date of the Special Meeting may not
be indicative of its price immediately before the completion of the Reorganization and the price of Walgreens
Boots Alliance common stock after the Reorganization is completed.
The rights of a shareholder of Walgreens Boots Alliance, a Delaware corporation, will vary in some
respects from the current rights of a shareholder of Walgreens, an Illinois corporation.
After the completion of the Reorganization, existing Walgreens shareholders will become shareholders of
Walgreens Boots Alliance, a public company incorporated in Delaware, instead of Walgreens, a public company
incorporated in Illinois. As a result, rights as a shareholder of Walgreens Boots Alliance will be governed by
Delaware corporate law and the Walgreens Boots Alliance certificate of incorporation and bylaws as opposed to
Illinois corporate law and the Walgreens articles of incorporation and bylaws. Although many of the differences
arising from this change will not have a significant impact on the rights of shareholders, the rights may vary in
some respects.
The certificate of incorporation and bylaws of Walgreens Boots Alliance, Delaware law and/or the
Company Shareholders Agreement may impede the ability of Walgreens Boots Alliance shareholders to
make changes to the Walgreens Boots Alliance Board of Directors or impede a takeover, which could
deprive the shareholders of the opportunity to receive a premium for their shares.
Although these provisions generally currently also exist with respect to the Company under its governing
documents and the Illinois Business Corporation Act, several provisions of the certificate of incorporation and
bylaws of Walgreens Boots Alliance and the Delaware General Corporation Law could make it difficult for
shareholders to change the composition of the Walgreens Boots Alliance Board of Directors. In addition, the
same and other provisions may discourage, delay or prevent a merger, consolidation or acquisition that
shareholders may consider favorable. See also the risk factor above “The second step transaction, if
consummated, would reduce the percentage ownership interests of our current shareholders and the principal
shareholders of AB Acquisitions may have significant voting influence over matters requiring shareholder
approval.” Under the Company Shareholders Agreement, the SP Investors and the KKR Investors have agreed to,
for so long as the SP Investors have the right to designate the SP Investor Designee (or Mr. Pessina continues to
serve as Executive Chairperson or Chief Executive Officer of Alliance Boots) and for so long as the KKR
Investors have the right to designate the KKR Investor Designee, respectively, vote all of their shares of common
stock in accordance with the Walgreens Boots Alliance Board of Directors’ recommendation on matters
submitted to a vote of its shareholders (including with respect to the election of directors). These provisions are
not intended, however, to make Walgreens Boots Alliance immune from takeovers and instead are intended to
protect Walgreens Boots Alliance shareholders from coercive or otherwise unfair takeover tactics by requiring
potential acquirors to negotiate with them and by providing the Walgreens Boots Alliance Board of Directors
with more time to assess any potential acquisition proposal.
As a holding company, Walgreens Boots Alliance will be totally dependent on dividends from its operating
subsidiaries to pay dividends and other obligations.
After the completion of the Reorganization, Walgreens Boots Alliance will be a holding company with no
business operations of its own. Its only significant asset will be the outstanding capital stock of its
subsidiaries. As a result, it will rely on payments from its subsidiaries, including Walgreens and Alliance Boots,
to meet its obligations. Additionally, Walgreens Boots Alliance’s subsidiaries may be restricted in their ability to
pay cash dividends or to make other distributions to Walgreens Boots Alliance, which may limit the payment of
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