American owners abandon Boots sale
Plans for a stock market float could be revived
BOOTS’ American owners blamed an ‘unexpected and dramatic change’ in financial markets as they abandoned plans to sell the pharmacy chain.
Walgreens Boots Alliance said it has seen ‘significant interest’ from would-be buyers since putting the 173-yearold High Street chemist up for sale in January.
But a lack of available funding due to ructions in the credit markets meant none of the potential bidders could make a high enough offer. It was thought Walgreens were hoping for £7bn – a price many suitors baulked at.
The sale’s collapse raises questions over the future of Boots and its chief executive Seb James.
But it could see plans for a stock market float revived – though not any time soon.
Walgreens chief operating officer Ornella Barra told staff the company ‘will continue investing in the future’ of Boots and its No7 beauty brand.
‘I am extremely excited about the future,’ she added, pledging to provide more details when Walgreens reports its third-quarter results tomorrow. Boots attracted interest from a range of the world’s biggest private equity houses as well as Mukesh Ambani’s Reliance Industries and Mohsin and Zuber Issa, the owners of Asda.
Walgreens initial £7bn price tag fell as a series of buyers backed out, and earlier this month it looked set to be sold to Indian conglomerate Reliance and US private- equity house Apollo for between £5.5bn and £6bn.
The deal appeared increasingly likely to collapse as the fallout from Russia’s invasion of Ukraine and rising interest rates in the UK and US caused borrowing costs to soar and sent a chill through debt markets.
The fallout would have made securing billions of pounds of debt to finance the deal much more difficult and expensive.
Walgreens chief executive Rosalind Brewer said the decision to abandon the sale reflected ‘rapidly evolving and challenging financial market conditions beyond our control’.
AJ Bell financial analyst Danni Hewson said the deal was thrown onto the rocks by a tricky outlook for UK retailers as consumers tighten their belts and a recession looms.
She said: ‘ UK plc has been in the spotlight over the last couple of years as investors sought to cash in on post-Brexit lows.
‘But inflation has turned up the volume on whispers that recession is on the cards and lately they’ve become too loud for financial markets to ignore.
‘To be fair, the price that Walgreens was asking was pretty steep for a business that feels like it’s lost its way. Many of the stores are tired, in need of some serious TLC and a touch of some kind of magic that would give them a new lease of life.’
Walgreens had kept the door open for Boots to return to the London Stock Exchange.
But plans for a float were dropped amid the significant privateequity interest and public market turmoil. Yesterday’s announcement, however, could see plans for a listing revived when markets settle. A source close to Walgreens said any new sale process would not begin for at least ‘a couple of years’.
‘The price was pretty steep’