Boots has revealed that it is now operating as a private, standalone business after Sycamore Partners completed its $10bn acquisition of the UK retailer’s parent company, Walgreens Boots Alliance (WBA).
Now called The Boots Group, the business will comprise Boots UK&I, Boots Opticians, No7 Beauty Company, Boots retail pharmacies in Thailand and international franchise retail operations, together with Farmacias Benavides in Mexico, Alliance Healthcare Germany, and existing retail investments in China. It will continue to be led by Ornella Barra as Chief Executive and will be registered and headquartered in the UK. Senior management will continue in their existing roles, including Anthony Hemmerdinger serving as Managing Director of Boots UK & Ireland.
Private equity firm Sycamore acquired WBA in partnership with Stefano Pessina, the renowned billionaire who was the company’s Executive Chairman and biggest shareholder. In addition to the separation of Boots, the deal, which was first announced back in March, has resulted in the breakup of the entire group, with the Walgreens chain in the US, as well as the Shields Health Solutions, CareCentrix, and VillageMD units, being set up to operate as standalone companies.
Sycamore’s takeover follows a tumultuous few years for WBA, which has led to its market capitalisation dropping 90% since 2015. It has been squeezed by pharmacy reimbursement headwinds, softer consumer spending, and competition from rival pharmacies, grocery chains, and Amazon. It has also been grappling with a troubled push into the healthcare sector.
Stefan Kaluzny, Managing Director of Sycamore, stated that The Boots Group would now be “free to invest and grow more aggressively into the future”.
Pessina added: “The Boots Group enters this next chapter with strength and momentum. Our family has supported the company over many years, and we are proud to do so now in partnership with Sycamore. As an investor group, we are committed to investing in The Boots Group in order to accelerate its already very successful record of growth.”
In contrast to its parent company, the Boots business in the UK has been performing well, with 17 consecutive quarters of market share gains following the refresh of its product offering, pricing, and stores.
Analysts suggested that the spinoff from WBA raises the prospect that the new Boots Company could be floated on the London stock market or sold. Shore Capital’s Clive Black said: “One of the central features of a private equity deal is that it ends in another deal, so let’s see.”
NAM Implications:
- A key advantage of operating the WBA divisions as separate companies is:
- Each business stands on its own merits
- Its performance will not be diluted by the weaker performance of sister companies
- Potential access to investment funding if required
- Individual businesses can be floated or sold, as required
- And therein lies the future of The Boots Group…
