Note 1.

Organization

Walgreens Boots Alliance, Inc. (WBA or the Company) is a new corporation incorporated on September 2, 2014 under the laws of Delaware and is currently a direct 100% owned finance subsidiary of Walgreen Co. (Walgreens). Walgreens Boots Alliance, Inc. is the issuer of several series of unsecured, unsubordinated notes in connection with the financing of a portion of the cash consideration payable in connection with the pending second step transaction, as described below, the refinancing of substantially all of Alliance Boots' total borrowings in connection with the second step transaction and/or the payment of related fees and expenses. Following the completion of the second step transaction, a portion of the net proceeds from the issuance of the notes may also be used for general corporate purposes, including the repayment and/or refinancing of existing WBA or Walgreen Co. obligations. Upon initial issuance, Walgreen Co. issued a full and unconditional guarantee on an unsecured and unsubordinated basis with respect to the notes.

In connection with the pending reorganization discussed below, WBA will become the holding company operated through its direct and indirect operating subsidiaries and will initially consist of the combined assets and operations of Walgreens and Alliance Boots GmbH (Alliance Boots). The reorganization is conditioned upon the second step transaction being completed immediately following the completion of the reorganization.

Pending Alliance Boots GmbH Acquisition

On August 2, 2012, pursuant to a Purchase and Option Agreement dated June 18, 2012, by and among Walgreen Co., Alliance Boots GmbH and AB Acquisitions Holdings Limited (as amended, the Purchase and Option Agreement), Walgreen Co. acquired 45% of the issued and outstanding share capital of Alliance Boots in exchange for $4.025 billion in cash and approximately 83.4 million shares of common stock. The Purchase and Option Agreement provided, subject to the satisfaction or waiver of specified conditions, a call option that gives Walgreen Co. the right, but not the obligation, to acquire the remaining 55% of Alliance Boots (the second step transaction) in exchange for an additional £3.1 billion in cash (approximately $4.9 billion using November 30, 2014 exchange rates) as well as an additional 144.3 million shares, subject to certain potential adjustments (the call option). On August 5, 2014, the Purchase and Option Agreement was amended to permit the exercise of the call option beginning on that date, and Walgreens, through an indirectly wholly-owned subsidiary to which Walgreens previously assigned its rights to the call option, exercised the call option on August 5, 2014.

Reorganization

On October 17, 2014, Walgreens entered into an Agreement and Plan of Merger (the Reorganization Merger Agreement) by and among Walgreens, Ontario Merger Sub, Inc., an Illinois corporation and indirect wholly owned subsidiary of Walgreens (Merger Sub), and WBA. The Reorganization Merger Agreement provides that Merger Sub will merge with and into Walgreens (the Reorg Merger), with Walgreens surviving the Reorg Merger as a wholly owned subsidiary of WBA. At the effective time of the Reorg Merger, issued and outstanding shares of Walgreens common stock will be converted automatically into the right to receive shares of WBA common stock, on a one-for-one basis. Walgreens shareholders will own the same number of shares of WBA common stock as they own of Walgreens common stock immediately prior to the completion of the Reorg Merger, and, after taking into account the completion of the second step transaction, such shares will represent the same ownership percentage of WBA as they would have of Walgreens immediately following the completion of the second step transaction without the Reorg Merger. The completion of the Reorg Merger depends on the satisfaction or waiver of several conditions. Walgreens may terminate the Reorganization Merger Agreement at any time, even after adoption and approval by Walgreens shareholders, if Walgreens board of directors determines to do so. In addition, the Reorganization Merger Agreement will automatically terminate upon the termination of the Purchase and Option Agreement prior to the completion of the second step transaction.