Walgreen Chief Executive Greg Wasson said that moving the company’s tax base overseas could have backfired, perhaps putting the company “in a significantly worse position than if we had not inverted at all.” (Nancy Stone, Chicago Tribune)

A seeming parade of U.S. companies has been marching across the Atlantic, reincorporating in Europe to take advantage of substantial corporate tax breaks.

Despite a growing drumbeat of criticism from activists and politicians, threats from U.S. officials to change the tax code, and other challenges, firms have pressed forward with a growing number of so-called inversions, concluding that the substantial tax savings outweigh the risks of decamping.

For Deerfield-based Walgreen, the risks proved too high.

Fearful of an IRS challenge, a change to U.S. tax laws, blowback from politicians and consumers, and the potential for untangling a just-completed purchase two years in the making, the drugstore chain announced the decision Wednesday to keep its headquarters in the Chicago area.

For Walgreen, under pressure from major investors to reincorporate in the United Kingdom or Switzerland after completing its $15.3 billion purchase of European counterpart Alliance Boots, moving overseas wasn't in its best long-term interest.

While an inversion could have potentially added hundreds of millions of dollars annually to Walgreen's bottom line, the move also could have backfired, perhaps putting the company "in a significantly worse position than if we had not inverted at all," Walgreen Chief Executive Greg Wasson told analysts.

Walgreen's decision to acquire Boots in two steps, starting by taking a 45 percent stake in 2012, complicated the prospect of inverting.

In order to move its headquarters overseas and shield its profits from a 35 percent U.S. corporate tax rate, Walgreen would have had to scrap its 2012 agreement and rework it entirely, Wasson said.

Changing the terms of that agreement could have brought additional scrutiny from the IRS, which could have challenged the deal. During a conference call, Wasson said the Walgreen board wasn't able to "ensure that the transaction could withstand almost certain, intense, protracted IRS scrutiny."

Disputes with the IRS could take up to a decade to adjudicate, Wasson said, which could "significantly complicate and impede everyday tax and business planning, possible dual taxation during intervening years and payment of back taxes with interest and significant penalties."

Public backlash to Walgreen weighing reincorporating overseas played a role in its decision to remain in the U.S., the company said.

Several U.S. companies, including North Chicago-based AbbVie, Deerfield-based Horizon Pharma, as well as Medtronic, Chiquita Brands and Mylan, orchestrated acquisitions that allow shifting their headquarters across the Atlantic Ocean to lower their corporate tax rate.

But for Walgreen, such an undertaking would have been "much more complex" and "far different" than other corporate inversions announced this year, Wasson said, in part because of its status as "an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs."

The company, with 8,200 retail stores throughout the United States, faced, by far, the most scrutiny. If Walgreen effectively renounced its U.S. citizenship, potential repercussions from American consumers and possibly the government were worrisome to some shareholders.

Vishnu Lekraj, an analyst with Morningstar, said the "political and potential consumer backlash would have been significant," particularly because of Walgreen's "deep brand roots as 'America's Pharmacy.'"

Wasson also cited "the potential consumer backlash and political ramifications" of the move as being part of the company's decision not to carry out an inversion.

Since Walgreen acknowledged in June that it was considering moving its tax domicile overseas, lawmakers including Sen. Dick Durbin of Illinois, the No. 2 Democrat in the U.S. Senate, have upped their rhetoric on the issue.

Along with fellow Democratic Sens. Elizabeth Warren of Massachusetts and Jack Reed of Rhode Island, Durbin sent a letter urging President Barack Obama to consider taking executive action to halt inversions.

The president, who has called corporate inversions "wrong" and an "unpatriotic tax loophole," had called on Congress to act on legislation to halt the exodus.

Treasury Secretary Jacob Lew said this week that the administration was considering ways to stop the practice without congressional approval.