Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Boots Owner in Talks to Offload £7 Billion UK Pharmacy Chain

Walgreens Boots Alliance Inc. is reviving discussions on a potential exit from its UK drugstore chain Boots, people with knowledge of the matter said, nearly 18 months after a sale process was scrapped.
Walgreens Boots Alliance Inc. has begun a strategic review of its Boots drugstore business, chief executive officer Rosalind Brewer said.
The company has been holding early talks about ways to separate Boots, which could be valued at about £7 billion ($8.8 billion) in a deal. (Shutterstock)

Walgreens Boots Alliance Inc. is reviving discussions on a potential exit from its UK drugstore chain Boots, people with knowledge of the matter said, nearly 18 months after a sale process was scrapped.

The company has been holding early talks about ways to separate Boots, which could be valued at about £7 billion ($8.8 billion) in a deal, according to the people. It’s studying a London initial public offering as one possibility, the people said.

Shares of Walgreens jumped as much as 2.9 percent on Tuesday, hitting the highest intraday level in two months. They were up 1.5 percent at 12:56 P.M in New York, giving the company a market value of $20 billion.

A Boots stock offering would be a big boost to the London stock market, which has been hit by a steady flow of companies opting to list elsewhere. UK IPO fundraising has fallen more than 50 percent this year to about $1 billion, according to data compiled by Bloomberg.

ADVERTISEMENT

Any process would only start next year at the earliest, the people said, asking not to be identified because the information is private. Walgreens reached a deal in November to offload Boots pension risks to Legal & General Group Plc, removing a stumbling block that had complicated previous efforts to divest the business.

Walgreens invited bids for Boots last year as it sought to hone its focus on North America, where it’s been adding more health care services. It abandoned the effort in June 2022 after failing to secure the desired valuation for the business amid a turbulent credit market.

During that last process, Indian billionaire Mukesh Ambani’s Reliance Industries Ltd. had teamed up with Apollo Global Management Inc. on a bid for Boots, which is the biggest UK pharmacy chain. They were competing with a separate consortium backed by TDR Capital and Britain’s billionaire Issa brothers, people with knowledge of the matter said at the time.

Walgreens could also opt to invite fresh offers for Boots, though higher interest rates would make it more difficult for private equity firms to pay top dollar. Deliberations are still at a preliminary stage, and there’s no certainty they will lead to a transaction.

A representative for Walgreens declined to comment.

Walgreens is in cost-cutting mode and has brought on new chief executive Tim Wentworth to attempt to turn around the business. On Monday, Walgreens had its senior unsecured credit rating cut to junk by Moody’s Investors Service, which cited the drugstore chain’s high debt relative to earnings.

Boots runs a sprawling network of more than 2,000 stores across the UK, as well as private-label brands like No7 Beauty Co. and operations in a smattering of other countries. Walgreens said earlier this year that it will close 300 Boots stores in the UK, mainly those in close proximity to other outlets, as it seeks to focus investment on its best performing locations.

By David Hellier, Dinesh Nair and Ryan Gould

ADVERTISEMENT

Learn more:

Walgreens Shelves Pharmacy Boots’ Sale as Market Turmoil Hits Dealmaking

Walgreens Boots Alliance on Tuesday scrapped the plan to sell its UK high street pharmacy chain, Boots, saying no third party was able to make an adequate offer due to the turmoil in global financial markets.

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Beauty
Analysis and advice on the fast-evolving beauty business.

The Important Message Behind ‘So Many Dicks’

A genius marketing campaign from E.l.f. Beauty this week emphasised how diversity, equity and inclusion efforts can be done at the highest levels — and what the barriers are to making substantial progress.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
The Business of Beauty Global Forum
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
The Business of Beauty Global Forum