US retailer Walgreens is to take full control of Boots the Chemist owner Alliance Boots after announcing a £9bn cash and shares deal to swallow up the 55% of the company it does not already own.
The new group, Walgreen Boots Alliance, will be based in Chicago but the headquarters of Boots will remain in Nottingham.
Walgreens said a programme of cost-cutting would target €1bn (£594m) in savings by 2017.
Alliance Boots employs more than 108,000 staff in more than 25 countries, including 70,000 in the UK, where Boots has nearly 2,500 stores.
Walgreens bought a 45% stake in Alliance Boots for €6.7bn (£4bn) in 2012, with the option to buy the rest by August 2015.
But yesterday's announcement means it will complete its take-up of the 55% remainder by February, in exchange for just over £3bn in cash plus 144.3m shares – with a value of just under £6bn.
It brings the total value of the deal to around £9bn, meaning Walgreens has spent about £13bn acquiring Alliance Boots – which comprises both Boots the Chemist and pharmaceuticals distribution arm Alliance.
The latest transaction will reportedly net a £1.5bn windfall for executive chairman Stefano Pessina, who took Alliance Boots private, with private equity firm KKR, in an £11.1bn deal in 2007.
Walgreens said it had rejected the option of moving its corporate headquarters out of the US in an "inversion" strategy to reduce its tax bill.
The move would have echoed the strategy mooted by drugs firm Pfizer as part of its failed attempt to buy Britain's AstraZeneca, but Walgreens concluded it would not have been in the best interests of shareholders.
An extensive analysis found that despite financial benefits there were doubts over whether the switch would have been given the green light by US tax authorities. It also considered the US public reaction to such a move by an "iconic American consumer retail company".
Walgreens said the merger would create a global leader in "pharmacy-led health and well-being retail" with more than 11,000 stores in 10 countries. It already has more than 8,500 locations in the US – where it also trades as Duane Reade.
The deal would also create the world's largest pharmaceutical wholesale and distribution network, with more than 370 centres delivering to more than 180,000 pharmacies, doctors, health centres and hospitals in 20 countries.
Mr Pessina, who will become executive vice chairman, said: "The expected creation of the new enterprise will represent the most significant milestone in the history of Alliance Boots and, importantly, a very positive step for the healthcare industry as a whole."
Walgreens chief executive Greg Wasson said: "This is a pivotal moment in Walgreens history as we venture ahead from the best corners in America to the four corners of the world."
The chain was founded in 1901 when Charles R Walgreen Senior bought the Chicago drugstore where he had worked as a pharmacist, before expanding across the country, becoming a public listed company in 1927.