DEERFIELD, Ill. (WLS) --Deerfield-based Walgreens will keep its headquarters in Illinois and not pursue plans to relocate overseas for tax reasons, the company announced Wednesday.
After months of consideration, company officials said that while it will not relocate outside of the U.S., it will buy the remaining stake in Alliance Boots, a Swiss health and beauty retailer.
"They have really invested in building trust in American customers and I think they have renewed that loyalty, that bond with this decision," said Sen. Dick Durbin.
By merging with a foreign company, Walgreens was mulling over a controversial move that dozens of U.S. corporations have already done. It's a tax strategy known as an inversion, in which companies give up their corporate citizenship to avoid paying U.S. corporate tax rates.
Despite the savings of $4 billion in five years, Walgreens CEO Gregg Wasson said this morning in a conference call that his company did not want to risk scrutiny from the IRS.
"While we fully understood the significant financial benefits of an inversion, when weighed against the risks, the company and board determined that pursuing a structure that included inversion was not right course of action," Wasson said.
Wasson also admits the political fallout played a role in Walgreens decision. Besides Durbin, President Obama lashed out at companies that have chosen inversions, calling them "corporate deserters."
Crain's Chicago Business' Brigid Sweeney says it was a public relations war that Walgreens lost.
"Walgreens never responded, they never got in front of the message," Sweeney said.
While Walgreens is staying put for now, they are not ruling out a move down the road. There's a call in Congress to look at the corporate tax rate as well as the corporate tax code, as Durbin has pushed for tax reform legislation that would stop tax inversion.