US-based Walgreens said today it was spending $6.7 billion (€5.3 billion) to take a 45% stake in European rival Alliance Boots.
The deal will create the world's largest retail pharmacy chain.
Walgreens said $4 billion of the acquisition would be in cash with the rest in shares.
It would also have an option to buy outstanding shares in the British-based high-street chain, which has several stores here.
Already the largest chains in the US and Europe, together the companies would be "the global leader in pharmacy-led, health and wellbeing retail with over 11,000 stores in 12 countries," Wallgreens said in a statement.
"This transaction will bring together two great companies with iconic brands, complementary geographic footprints" which will have "diversified and robust profit pools across the US, Europe and key emerging markets," it added.
Walgreens estimated the cost of taking complete control of Alliance Boots at approximately $9.5 billion in cash and stock, plus the assumption of Alliance Boots outstanding debt, given its current share price and exchange rates. That would put the total cost of the transaction at $16.2 billion.
US buyout firm KKR paid £11 billion to take over Alliance Boots in 2007.
Walgreens said the boards of directors of both companies had unanimously approved the transaction, which it said it expects to take place by September 1 pending regulatory approvals.