He is not exactly a household name – probably just the way he likes it – but Stefano Pessina touches the lives of millions of people every day.
The 79-year old Italian sits at the summit of Walgreens Boots Alliance, the world’s biggest pharmaceuticals retailer, wholesaler and distributor, in which he is also the biggest shareholder.
Building this empire has been his life’s work.
Today, though, came a signal that Mr Pessina, one of Europe’s richest people, may be preparing to take life a little easier.
Walgreens Boots Alliance (WBA) announced that Mr Pessina had decided to step down as chief executive, a post he has occupied since January 2015, shortly after the merger of Walgreens and Alliance Boots was completed.
The company said the new chief executive would be expected to “drive further progress on…key strategic priorities and to transform the business for the future to address the rapidly-evolving healthcare sector”.
Not that Mr Pessina is stepping aside altogether. He will be assuming the role of executive chairman once his successor as chief executive has been identified.
Mr Pessina said: “I want to thank our team members around the world for their extensive achievements in the last five years, as we have fulfilled our purpose to help people lead healthier and happier lives.
“I look forward to continuing to serve the company as executive chairman and to helping to ensure the success of the new chief executive officer in every way possible.”
The news is a hint that WBA is preparing for the transition for a post-Pessina world.
It will be an immense challenge for a company which despite the venerable history of its key brands – Boots dates back to 1849 and Walgreens to 1901 – is very much Mr Pessina’s creation.
Mr Pessina was born in 1941 in Pescara, on Italy’s east coast, where his father was serving as an air force officer. He studied nuclear engineering at university in Milan and initially wanted to be a nuclear physicist but decided in the mid-1960s that it was “exactly the wrong time” go pursue a career in nuclear energy. He instead decided to pursue a career in marketing before his father, Oreste, asked him to assist in the turnaround of his struggling pharmaceutical wholesaling firm in Naples.
An early adopter of using IT, he quickly achieved this, attracting the attention of his father’s friends. He agreed to help them out, in return for small stakes in their companies, quickly identifying that, in the inflationary world of the 1970s, it was cheap and easy to acquire rival businesses swiftly without being overwhelmed by debt. In 1977, after more than 150 small acquisitions, he renamed the company Alleanza Farmaceutica.
Overseas expansion in Portugal, Greece and France followed and, by the mid-1980s, the company was Italy’s biggest drugs distributor and wholesaler. The acquisitions also continued and one, in 1986, brought Mr Pessina together with his pharmacist partner, Ornella Barra, who has worked in the business since. She is currently co-chief operating officer at WBA.
For a less ambitious executive, domination of Italy and some other European markets might have been enough, but the workaholic Mr Pessina kept on growing.
His empire arrived in Britain when in 1997, his company – by now rechristened Alliance Sante – merged with the UK drugs distributor UniChem, owner of the Moss Chemists chain. Mr Pessina emerged from the deal with a 37% shareholding in the enlarged group and some assumed that was the extent of his ambitions. It was not.
In October 2005, now executive chairman of Alliance UniChem, Mr Pessina announced a merger with the then-struggling Boots chain having tried unsuccessfully, five years earlier, to get the previous Boots to agree a deal. The merger created Europe’s biggest chain of pharmacists and again saw Mr Pessina emerge as the biggest shareholder of the combined company with a 15% stake.
He followed this in early 2007 by teaming up with KKR, the US private equity firm, with a bid to take the company private. They eventually succeeded with an £11.1billion takeover that represented a landmark in City history – the first ever takeover of a FTSE-100 company by a private equity-led consortium.
The deal was completed on the eve of the financial crisis and, followed by several years of turmoil on markets, meant KKR could not exit its investment in the timescale private equity firms like to. Alliance Boots, meanwhile, had also been saddled with nearly £8billion worth of debt which proved a stern test for Mr Pessina’s management skills.
KKR eventually was able to begin to get out when, in 2012, it and Mr Pessina agreed to sell a 45% holding in Alliance Boots to the US drugs giant Walgreens for $6.7billion in cash and shares. Walgreens was also given the right to buy the remaining 55% three years later for $9.7billion as well as assuming the company’s debt.
Again, people assumed, this would be Mr Pessina’s last deal before retiring. It was not.
When Walgreens took full control, in 2015, it became clear that Mr Pessina – who emerged with 20% of the enlarged Walgreens Boots Alliance – had effectively pulled off a ‘reverse takeover’ in City jargon.
He told the Sunday Telegraph at the time: “What was motivating me to stay and work to create the strategy of the company and buy other companies? It’s a desire to build, to build something. I am an engineer at the end of the day, I like building things.”
What Mr Pessina was not anticipating at the time was having to run the business on a day-to-day basis. He has always seen his role as being that of a strategist.
Today’s announcement is likely to see him reassert himself in that role.
It has been a remarkable career and no-one would bet against another chapter.
Last November saw rumours that Mr Pessina had held talks with KKR about taking WBA private amid frustration at its poor share price performance. It was a lucky escape: Wall Street analysts suggested at the time that the mooted buy-out would have to be at between $65-$70billion. Today, with shares of WBA having fallen by more than one-third this year, the company is valued at just $34billion.
That is not to say that, as chairman, Mr Pessina might not be tempted to have another tilt. Debt is cheap and there would be no shortage of would-be partners in the private equity sector prepared to back him.
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