Boots owner plotting sale to private equity
THE American owner of chemist chain Boots is considering a blockbuster deal to go private, it was claimed last night.
Walgreens Boots Alliance, which is run by billionaire Italian businessman Stefano Pessina, has reportedly held early-stage talks with private equity firms about the potential buyout.
It has also drafted in the investment bank Evercore Partners to see how the deal could be done.
Walgreens is the world’s biggest pharmacy chain with 18,500 stores and 415,000 staff and owns beauty brands including No 7, Soap & Glory, Liz Earle and Botanics. It was valued at £43bn last night.
Pessina is its biggest single shareholder, with about 16pc of shares through his vehicle Alliance Sante Participations SA.
His stake is valued at around £7bn. Boots has been part of the group since 2014, when the British company was merged with Walgreens in a £16bn deal.
That followed another deal masterminded by Pessina in 2006, when his Alliance Unichem took over the retailer for £12bn with private equity backing.
The 78-year- old, who is worth an estimated £8.8bn, has pulled off some 1,500 deals during his career. He started out in 1977 when he took over his family’s pharmaceutical wholesaler in Naples, Italy, and built his empire from there, offering to overhaul other firms in exchange for shares in them.
His 65-year-old partner, Ornella Barra, is co-chief operating officer of Walgreens.
However in recent years both the parent company and Boots have struggled due to the same pressures facing many high street shops, such as weak sales, rising costs and brutal competition from online rivals.
The brands have also suffered from falling profit margins on prescription drugs, prompting massive cost- cutting programmes. Overall, Walgreens plans to wring out £1.4bn in savings from its businesses by 2022, with job reductions and hundreds of store closures, including 200 in the UK.
Boots has also responded to the tough conditions by focusing on customer ‘experiences’.
Chief executive Seb James is overhauling stores and opening beauty halls, including a flagship site in London’s Covent Garden.
These will offer more environmentally-friendly products, fitness gadgets such as Fitbits, refill stations for skincare products, live demonstrations and Instagram zones for taking pictures and posting them on social media.
The company is also bringing No 7 and other brands to the vast Chinese market through the launch of an online Boots store on Tmall Global, a platform run by ecommerce giant Alibaba.
Bosses have said they want Walgreens Boots Alliance to become a ‘mass specialist’, delivering healthcare to large numbers of people around the world.
Insiders last night said they did not expect any potential buyout deals to affect the overhaul plans for Boots.
However some of the buyout firms have so far shown reluctance to participate in a transaction, Bloomberg reported.
Sources said it was unclear how feasible the transaction would be and that the company could decide against pursuing the idea. Last night Walgreens declined to comment on reports about the potential buyout.