Reliance in talks to raise up to $8 bn for Boots acquisition
MUMBAI: Reliance Industries Ltd (RIL) is in talks with a clutch of global banks to raise $8 billion for its planned leveraged buyout of British pharma chain Boots, two people aware of the discussions said.
The conglomerate, led by billionaire Mukesh Ambani, is in talks with a consortium of foreign lenders comprising Barclays Bank Plc, Deutsche Bank AG, HSBC and Standard Chartered Bank for its biggest crossborder acquisition plan, the people cited above said on the condition of anonymity.
On June 9, Mint reported that a consortium of RIL and buyout firm Apollo Global Management Inc. emerged as a top contender to acquire Walgreens Boots Alliance Inc.’s Boots pharmacies unit in the UK, with an offer valuing the latter’s assets at $7-8 billion.
“The board of Walgreens Boots Alliance is likely to meet in the next few days with an agenda to discuss the potential deal with the RIL-Apollo Global consortium. Following that, the RIL board will meet to approve the proposed takeover,” one of the two people said.
After the acquisition, Reliance plans to integrate Boots assets with Reliance Retail Ltd and bring the combined entity under Reliance Retail Ventures Ltd (RRVL).
“Since RRVL and Walgreens Boots have steady cash flows, along with a large franchise across Europe, several global banks have stepped in for financing,” the second person said, adding that Reliance may later refinance the loan.
An RIL spokesperson declined to comment on the story, while queries emailed to Walgreens, Barclays, Deutsche Bank, Standard Chartered and HSBC remained unanswered until press time.
According to the people cited above, the RIL-Apollo offer is significantly above competing bids, which are in the range of $5-6 billion. Walgreens put its Boots business on the block in December, seeking a valuation of $8.8 billion. The US drugstore chain also runs more than 2,200 Boots health and beauty stores across the UK, with around 85% of the population estimated to be within 10 minutes of a Boots store.
In the third quarter of fiscal 2021, RRVL raised ₹47,265 crore by selling a 10.09% stake. It recorded consolidated revenue of ₹1.99 lakh crore for FY22, an increase of 26.7% from a year earlier, while net profit rose 28.7% to ₹7,055 crore. The company reported its highest ever Ebitda at over ₹12,000 crore.
According to analysts, the Boots acquisition will expand RIL’s operations in Europe, give it economies of scale, and open a lucrative business gateway to MENA (the Middle East and North Africa) markets.
The deal will also substantially expand RIL’s presence in healthcare if it goes through. In 2020, the company acquired a 60% stake in Chennai-based online pharmacy startup Netmeds for ₹620 crore.
RIL has also made a series of acquisitions in healthcare and pharma.