Walgreens Boots Alliance Inc. is reportedly in discussions regarding the potential sale of its UK drugstore chain Boots, according to sources familiar with the matter. This comes almost 18 months after a previous sale process was abandoned. The company has initiated early talks to explore options for separating Boots, which could be valued at approximately £7 billion ($8.8 billion) in a potential deal. Among the possibilities being considered is an initial public offering (IPO) in London.
If a Boots IPO were to take place, it would provide a significant boost to the London stock market, which has experienced a decline in companies choosing to list elsewhere. Data compiled by Bloomberg indicates that UK IPO fundraising has fallen by over 50 percent this year, amounting to approximately $1 billion. The sources noted that any process for Boots would not commence until next year at the earliest. In November, Walgreens reached an agreement to transfer Boots pension risks to Legal & General Group Plc, resolving an issue that had previously complicated divestment efforts.
Last year, Walgreens sought to focus on its North American operations and invited bids for Boots. However, the sale attempt was abandoned in June 2022 due to an inability to secure the desired valuation for the business amidst a turbulent credit market.
During the previous sale process, a consortium led by TDR Capital and the Issa brothers, along with Indian billionaire Mukesh Ambani’s Reliance Industries Ltd. and Apollo Global Management Inc., expressed interest in acquiring Boots. However, no transaction was finalized.
Walgreens may also consider inviting new offers for Boots, although higher interest rates could pose challenges for private equity firms looking to make competitive bids. It should be noted that the discussions regarding the potential sale of Boots are still in the early stages, and there is no certainty that a transaction will occur.
Boots operates an extensive network of over 2,000 stores across the UK and owns private-label brands such as No7 Beauty Co. It also has operations in several other countries. Earlier this year, Walgreens announced plans to close 300 Boots stores in the UK, primarily those situated near other outlets, as part of its strategy to concentrate investments on its best-performing locations.
