Walgreens Buys 55 Percent of UK Business, Stays in US

The pharmacy company pulled back on its plan to switch its headquarters overseas.
3:54 | 08/06/14

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Transcript for Walgreens Buys 55 Percent of UK Business, Stays in US
I'm Michelle Franzen in New York as the financial markets closed for Wall Street on this Wednesday August 6 this a story stock. Today were at the corner of happy and healthy with Walgreens the retail drugstore chain. Is -- the rest of a British company but Walgreens has made a decision that leaves. Uncle -- smiling to explain all of this joined by Jeff MacKey at Yahoo! finance good afternoon mr. good known -- what did. The company Walgreens finished -- -- in what's significant about where that company is located. Well it's Europe's largest pharmacy and at Walgreens when I had and the profit 5% -- -- roughly half of alliance boots is the name of the company. Now what's significant about it is that Walgreens had toyed with -- the idea. Moving their headquarters from Chicago where they've been for over a century. Two bombs and most likely Switzerland or Britain had the choice but probably Switzerland for the -- tax savings because the tax rates in the US is 35% much lessons -- -- What is save them billions a year but after much consternation and more than just a little bit of arm twisting -- has decided to stay in the US. And so the word of the day is inversion where company reorganize its outside the US to avoid paying US taxes that's a hot button issue right now. One survey puts that number of US companies who've done this at 47 over the past ten years. So what -- the factors be behind Walgreens. Deciding not to -- Well they were under a lot of pressure and -- -- this is just that it's glaring tax code problem that we have the United States -- 35%. Tax rate on corporate level normally pays that anymore than individuals paid around tax rates they at all these different loopholes. And what companies have been doing isn't playing by the rules literally following the law has made by congress and and that apparently -- congress. And so this -- become this matter of patriotism this idea that you should maximize their taxes which. On the surface every American who's possibly hearing my voice knows that that's just a canard it's just politics. But then again want to get into the billions of dollars -- particularly if -- Chicago politician like Dick Durbin. And or the president of the United States who happens to also be from Chicago you frown upon Walgreens one and moved to Switzerland -- four billion in taxes. And so what they did was the Treasury Department was going to investigate ways to slow this down. If you're corporation you do not want the Treasury Department getting in your business and so what -- sort of it hits you could barely tell the CEO is being dangled by his ankles from a fifty story building when he made the statement. How did investors this decision walk us through this today Walgreen stock chart. OK well there you can see the stock from perform rather nicely as they mulled the idea of whether or not they can move to Switzerland and kind of deal with this and that -- They lost ten billion dollars in market cap today alone -- Because of this decision so with the idea I don't know at what price patriotism freedom isn't free as the song says -- it -- gas cost ten million dollars. It's a rough decision in the short term for -- is just stupid stupid loophole on our taxes. It would seem like we actually have politicians elected to make these laws to make them less -- and we dom. But when you set up the entire system so that everyone who hires an accountant is looking for exactly these type of rules that you can kind of take your deductions and and minimize your taxes well. It seems weird to punish our companies for following the rule book that we make but hey. That's above my pay grade target for me who didn't go into that issue just tell you that -- that cost ten billion dollars for -- and shareholders this afternoon. Well keep -- watch on that stock Walgreens -- -- it right here in the US Jeff MacKey from Yahoo! finance thanks for joining us. And you've been watching story stocks -- -- abcnews.com. For your latest headlines I'm Michelle Franzen in New York.

This transcript has been automatically generated and may not be 100% accurate.

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