US retailer Walgreen will make a full takeover of Europe's biggest pharmacy chain Alliance Boots, but will not use the deal to move its tax domicile overseas after fierce criticism of such tax-cutting moves at home. 

Walgreen said it would buy the 55% it does not already own of Alliance Boots for £3.13 billion in cash and 144.3 million Walgreen shares, after first taking a 45% stake in 2012. 

It added the combined company, with over 11,000 stores in 10 countries, would keep its tax domicile in the US, with its headquarters in Chicago.

Walgreen's retreat is the third major possible tax "inversion" deal to collapse in recent months amid heightened political sensitivity in the US to such transactions. 

The company said it was mindful of the public reaction to a potential inversion deal and its role as an "iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programmes". 

"The company concluded it was not in the best long-term interest of our shareholders to attempt to re-domicile outside the US," chief executive Greg Wasson said in a statement. 

Walgreen announced a new goal for adjusted earnings per share (EPS) for fiscal 2016 of $4.25-$4.60 and said it was accelerating cost reduction initiatives to achieve $1 billion in savings by the end of fiscal 2017. It also said it planned a new $3 billion share repurchase programme.

Boots has 74 stores in Ireland and employs just over 2,000 staff.

Walgreens acquired its 45% stake in Alliance Boots for $6.7 billion in 2012 and had the option to buy the rest by next August. The deal for full ownership of the business is expected to be completed in 2015. 

Boots brands such as No7 and Botanics are already sold in Walgreens and Duane Reade stores in the US, with the American firm's products introduced to Boots stores as part of the deal in 2012. 

Alliance Boots traces its roots back to 1849 when John Boot opened his first store selling herbal remedies in Nottingham. It opened its 1,000th store in 1933 followed by the No7 cosmetics range two years later. 

Boots Group merged with Alliance UniChem to form Alliance Boots in 2006 before it was taken private in Europe's largest leveraged buyout a year later.