Walgreen's pending acquisition of Alliance Boots is ripe with opportunities, including the potential for lower taxes and stock buy backs, activist investor Barry Rosenstein told CNBC Tuesday.
The drug store chain is "an iconic brand but it's a company that's underperformed on an operating basis and on a shareholder return basis over almost every time frame you could look – 1 year, 5 years, 10 years," said Rosenstein, founder and managing partner of Jana Partners, an investment firm with $10 billion in assets under management.
However, with the takeover of Alliance Boots, Walgreen can implement much of the Swiss-based pharmacy chain's playbook, and "improve stores, improve product offerings, cut costs," he said. Alliance Boots' margin is roughly doubled that of Walgreen.
There is also the potential for Walgreen to lower its taxable income if it reincorporates and relocates to Europe, something Rosenstein believes Walgreen "should clearly be looking at."