Boots’ owner ditches plans for £5bn sale of chemist as market conditions ‘beyond our control’
Boots’ US owner has confirmed it has given up on its ambitions to sell the UK chemist after a beleaguered sales process.
Walgreens Boots Alliance (WBA) has opted to retain ownership of Boots, with the firm citing “unexpected and dramatic change” felt by the global financial markets in the past few months.
A statement from WBA continued: “As a result of market instability severely impacting financing availability, no third party has been able to make an offer that adequately reflects the high potential value of Boots and No7 Beauty Company.”
WBA chief executive officer, Rosalind Brewer, confirmed on Tuesday that the company had completed a “thorough review” of Boots and No7 Beauty Company, “with the outcome reflecting rapidly evolving and challenging financial market conditions beyond our control.”
It was an “exciting time” for the firms, which were “uniquely positioned” to “capture future opportunities presented by the growing healthcare and beauty markets,” she added.
A protracted auction process has resulted in just one suitor making a binding offer for the chain.
A consortium of Apollo and Reliance Industries had lined up lenders to finance a significant part of the acquisition.
While the billionaire brothers behind Asda, Mohsin and Zuber Issa and TDR Capital, had seemed eager to make a bid, financing had also reportedly proved difficult.
With bidders struggling to finance a deal, WBA was readying itself to hold onto a significant minority stake to push the takeover through.
Ornella Barra, one of the owners of Walgreens Boots Alliance, said earlier this year that an IPO had initially been eyed as a way to spin off the chain, before interest from takeover firms.
“At the beginning we had the idea of an IPO, but we didn’t start the process because the offers came in,’ she told the Daily Mail.
At the time, Barra refused to rule out an IPO for the firm, however, saying “everything is on the table.”
“If the offers (from private equity bidders) are not in line with our expectations we could come back to an IPO.”
Earlier this year, a consortium made up of private equity titans CVC and Bain withdrew from the race after admitting they would only be willing to cough up £4bn for the chemist.
Sarah Riding, retail partner at the law firm Gowling WLG, said: “While disappointing news, it is right to set aside acquisition plans if the financial commitment cannot be met – the current and future value that incorporating the Boots brand would bring to any buyer is immense, given its strong domestic market and also its global reach.
“It will be interesting to see if this opens the floodgates for other, more alternative buyers from the private equity market to consider an offer.”