Retail pharmacy chains Boots and Alliance Unichem have insisted their proposed merger will come to fruition, despite a legal challenge from German rival Celesio.

Celesio, which operates the Lloyds Pharmacy chain, has mounted a legal challenge to the conditional clearance of the merger by the UK’s Office of Fair Trading last month, even though it raised questions about the dominant position the merged company - Alliance Boots - would hold in the retail pharmacy marketplace.

The OFT said it would not refer the deal to the Competition Commission, which handles antitrust issues in the UK, as long as Boots agreed to divest 100 stores.

"The public rely on community pharmacy as a frontline health service. We believe that such a significant change to the market requires further consideration," said Celesio in a statement.

Boots and Alliance Unichem said they would seek permission to intervene formally in the legal proceedings to voice their support of the OFT’s stance on the merger.

If the transaction goes through, Alliance Boots would operate nearly 2,500 stores, hold nearly a fifth of the UK retail pharmacy market and boast annual sales of around £13 billion ($23bn). Celesio operates around 1,500 retail pharmacy outlets in the UK, mostly under the Lloyds banner.