BOOTS and ALLIANCE in talks over 7.5bn merger Essay

BOOTS and ALLIANCE in talks over 7.5bn merger - Essay Example 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 f rom the institutional shareholders who generally regard such nil-premium mergers with skepticism. The companies, 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. The company ascertains that it would be in a better position to handle the competition faced by it from TESCO. The company also proposes to start smoking and weight-loss clinics and creating beauty parlors in the group’s stores throughout Europe.