Walgreens could lose billions on Boots sale
America’s second-largest chemist chain looked set to lose billions of pounds on its planned sale of British pharmacy stalwart Boots, it was reported on Monday.
Walgreens Boots Alliance put the UK’s largest chain of high-street pharmacies on the market last year, after selling its wholesale division.
Walgreens – which is the second-largest player in the US sector after CVS – spent £9bn on Boots in 2014, and has reportedly placed a £7bn price tag on it now.
But the Telegraph reported on Monday that previous favourites to buy the retailer, CVC and Bain Capital, were prepared to shell out just £4bn. They went on to describe that valuation as “significant”, given CVC’s UK chief Dominic Murphy also sits on the Walgreens Boots Alliance board, and had been involved with Boots for a decade and a half.
CVC and Bain pulled the pin on the possibility of an offer in March, without lodging a formal offer.
Billionaire garage owners and retailer buyout extraordinaires the Issa brothers, as well as Apollo Global Management and Sycamore Capital, reportedly remained interested in Boots.
The Issa brothers were said to be working with TDR Capital – with which they took control of Asda from Walmart last year – and had apparently retained Rothschild investment bankers in investigating the deal.
Reports last week suggested Walgreens was willing to retain up to 30% of Boots in any sale, as well as a board seat, as the rising cost of borrowing made a debt-financed takeover less appealing.
In late March, it was reported that Boots’ retail sales were up 22% year-on-year, with UK and Ireland head Sebastian James describing a “rejuvenated store portfolio” and a growing online presence.
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