Walgreens Boots Alliance (WBA) has announced that it will retain the ownership of its UK-based Boots business after a long-running auction failed to yield a suitable buyer.
Having launched a review of the business in January, WBA said today that it had been encouraged by “productive discussions” held with a range of parties, receiving “significant interest” from prospective buyers. However, since launching the process, the group noted that the global financial markets had suffered dramatic change. As a result of market instability impacting financing availability, it said no third party was able to make an offer that “adequately reflects the high potential value of Boots and its No7 Beauty Company”.
WBA stated that it was in the best interests of shareholders to keep focusing on the further growth and profitability of the two businesses, which have seen better performance in recent months as the UK emerged from the pandemic.
“We have now completed a thorough review of Boots and No7 Beauty Company, with the outcome reflecting rapidly evolving and challenging financial market conditions beyond our control,” said Chief Executive Rosalind Brewer.
“It is an exciting time for these businesses, which are uniquely positioned to continue to capture future opportunities presented by the growing healthcare and beauty markets. The Board and I remain confident that Boots and No7 Beauty Company hold strong fundamental value, and longer term, we will stay open to all opportunities to maximize shareholder value for these businesses and across our company.”
A consortium comprising of Apollo Global Management and the Indian conglomerate Reliance Industries were favourites in the race for Boots, ahead of the Issa brothers and TDR Capital. However, the £5.5bn auction had faltered in recent weeks as the war in Ukraine, soaring inflation, and rising interest rates combined to push up borrowing costs. Financing is particularly difficult in the retail industry, which is facing a slowdown in consumer spending.
NAM Implications:
- Immediate relief of uncertainty for all stakeholders.
- Meaning suppliers can think strategically and propose longer-term strategies…
- …given that WBA & Boots priorities are further growth and improved profitability.
- Then suppliers that propose ways of optimising each will find receptive buyers ready to collaborate.
- (keeping in mind the need for fair shares of sales and profits to optimise the relationship…)
