(Bloomberg) Walgreen Co., the biggest U.S. drugstore chain, said it plans to pay about $15.3 billion for the part of Alliance Boots it doesn’t already own, and won’t use the deal to move its tax address abroad. The shares fell.

Walgreen, which will remain based in Deerfield, Illinois, previously controlled about 45 percent of Boots, the Swiss company that runs pharmacy and beauty stores in Europe. It will pay about $5.29 billion in cash and $10 billion in Walgreen stock for the remaining stake, the company said in a statement. The stock fell 14.3 percent to $59.26 in early New York trading.

Walgreen, which considered redomiciling in Switzerland to lower its tax rate, has come under political pressure not to do a so-called tax inversion. The decision comes as other U.S.-based companies, including drugmakers AbbVie Inc. and Pfizer Inc., have struck or attempted deals to cut their own rates by establishing their tax headquarters abroad.

“A potential tax inversion has become a hot button topic in recent weeks as the company and a handful of outspoken investors have weighed the option,” said Ross Muken, an analyst with ISI Group LLC, in a note to clients before the deal was announced.

Moving overseas could have saved Walgreen at least $4 billion in taxes over five years, he said.

The company also announced a plan to buy back as much as $3 billion in stock and a quarterly dividend of 33.75 cents a share. Walgreen shares fell 4.2 percent to $69.12 yesterday in New York, the biggest one-day drop in more than a year.

Political Pressure
Senator Richard Durbin, an Illinois Democrat, said in a July 22 letter to Walgreen Chief Executive Officer Gregory Wasson that should the company decide to go through with a tax inversion, management would be “turning your backs on the very people that have allowed Walgreen’s to thrive and prosper.”

Lawmakers in both major U.S. political parties have examined ways to stop the departures. The U.S. Treasury Department said yesterday it is examining whether it has the authority to stop companies moving overseas while it waits on Congress to pass comprehensive tax reform.

“We carefully and extensively evaluated the potential of an inversion,” including potential consumer backlash and political ramifications, before deciding against it, Wasson, the Walgreen CEO, said on a conference call with analysts.

In the company’s statement, Wasson said the board “could not arrive at a structure that provided the company and our board with the requisite level of confidence that a transaction of this significance would need to withstand extensive IRS review and scrutiny.”

Early Option
As a result, the company decided it wasn’t in the best interest of its investors to attempt to set up its tax address outside the U.S., Wasson said.

“Two years ago, Stefano Pessina and I stood together with a shared vision,” Wasson said on the call, referring to the Boots executive chairman. “Our vision had a compelling strategic rationale giving us complementary assets, substantial synergy potential, revenue and profit diversification and a platform for international growth.”

Walgreen took a 45 percent stake in Alliance Boots for $6.7 billion in 2012 in an effort to build a global pharmacy chain. Walgreen had the option to gain full control of the chain within three years of that deal. The agreement announced today revised the original accord to enable Walgreen to make the purchase between yesterday and Feb. 5.

U.S. Rate
At 35 percent, the U.S. has the highest corporate tax rate in the developed world and is one of few countries that makes a company pay that rate on all the global income it brings home.

The combined company will be led by Wasson and blend senior management from both companies, according to the statement. Pessino will remain as executive vice chairman responsible for strategy and mergers and acquisitions.

The company set an adjusted earnings per share goal of $4.25 to $4.60 for fiscal year 2016, which includes a target to cut costs by $1 billion by the end of fiscal year 2017.

Goldman Sachs and Lazard advised Walgreen in the transaction.

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