Walgreens Boots Alliance, the owner of Boots, is in talks with American private equity firm Sycamore Partners about a possible sale.
- The potential deal values the British high street retailer at up to $10 billion (£7.8 billion), following a significant drop in Walgreens’ share price.
- The discussions have led to a 20% rise in Walgreens’ stock value during late trading.
- Sycamore Partners, known for previous investments in UK retail, is not expected to acquire all of Walgreens.
- Despite financial struggles, Boots has demonstrated growth in its sales across UK city centres and travel areas.
Walgreens Boots Alliance, the American owner of Boots, is reportedly in negotiations with Sycamore Partners regarding a possible sale, as disclosed by The Wall Street Journal. The transaction could value the popular UK retailer at approximately $10 billion (£7.8 billion). This move comes on the back of a sharp decrease in Walgreens’ market value, which has plummeted from over $100 billion in 2015 to roughly $7.5 billion today.
The announcement of these negotiations has positively impacted Walgreens’ share price, marking a 20% increase during late trading on the day of the report. This improvement reflects investor optimism despite the uncertainty surrounding the actualisation of the deal.
Sycamore Partners, an American investment firm with a history of investing in UK retail businesses, is involved in these talks. The firm has previously held stakes in companies like Kurt Geiger and has made offers for Ted Baker in 2022. However, due to its recent preference for smaller-scale investments, there is a low likelihood of Sycamore acquiring Walgreens in its entirety.
Stefano Pessina, Walgreens’ billionaire chairman and largest shareholder, might continue to hold a significant portion of Boots, depending on the structure of any deal. Pessina has played a central role in Walgreens’ acquisitions over two decades, underscoring his influence and interest in ongoing operations.
Despite the financial challenges faced by Walgreens, including an $8.6 billion net loss in the last fiscal year and ongoing issues such as reduced consumer spending in the US and low drug reimbursement rates, Boots has managed to maintain its resilience. The British retailer reported a 6.2% increase in sales during the quarter ending in August, driven by enhanced customer footfall in urban centres and transport hubs. Additionally, their pharmacy sales rose by 10% year-on-year owing to demands for NHS and private healthcare services.
The potential sale of Boots highlights Walgreens’ strategic adjustments against its economic backdrop, with future outcomes dependent on ongoing negotiations.
