Walgreen Co. will pay $6.7 billion in cash and stock to buy a stake in European health and beauty retailer Alliance Boots in the first international venture for the largest U.S. drugstore chain.

The company said Tuesday it plans to initially spend about $4 billion in cash and contribute more than 83 million shares for a 45 percent ownership stake in Switzerland-based Alliance Boots, which runs more than 3,300 health and beauty retail stores in 11 countries.

Walgreen has an option to buy the rest of the company in about three years in a deal valued at around $9.5 billion based on Walgreen's share price and the current exchange rate.

Walgreen expects the purchase of its initial stake in Alliance Boots to be completed by September. Alliance Boots also runs a pharmaceutical wholesale business that supplies pharmacies, doctors and other health care providers in 21 countries.

The acquisition comes while Walgreen works through a sales slump prompted largely by a split with pharmacy benefits manager Express Scripts Holding Co. Walgreen has seen sales fall for several months since it stopped filling prescriptions for Express Scripts, the largest U.S. pharmacy benefits manager, at the end of last year.

On Tuesday, Walgreen also said its fiscal third-quarter earnings dropped 11 percent in part due to the Express Scripts break. Walgreen earned $537 million, or 62 cents per share, in the three months that ended May 31. That compares to earnings of $603 million, or 65 cents per share, in last year's quarter.

Revenue slid 3 percent to $17.75 billion.

Analysts expected, on average, earnings of 62 cents per share on $17.88 billion in revenue.

Walgreen said it expects the Alliance Boots deal to add between 23 and 27 cents per share, excluding transaction costs, to its earnings in the first year after it completes the initial step. It said the pharmacy-led retail and wholesale businesses of both companies will continue to operate under their already established brand names, and there are no plans to cut jobs at either company because of the deal.

Walgreen also said Tuesday its board raised its quarterly dividend 5 cents to 27.5 cents per share from 22.5 cents. The dividend will be payable Sept. 12 to shareholders of record on Aug. 17

The chain operates 7,890 drugstores in all 50 states, the District of Columbia and Puerto Rico.

Company shares closed at 31.96 on Monday and then jumped 79 cents, or 2.5 percent, to $32.95 Tuesday in premarket trading.