Walgreens Boots Alliance is in talks to sell Boots, its UK high street chain, to Sycamore Partners.
- The potential sale could value the retailer at up to $10 billion (£7.8 billion).
- This follows a significant decline in Walgreens’ market value since 2015, affecting share prices.
- Recent news of these talks caused a 20% surge in Walgreens’ shares in late trading.
- Sycamore Partners has a history of UK retail investments, raising interest in their potential acquisition.
Walgreens Boots Alliance, the US-based owner of Boots, is reportedly in discussions with private equity firm Sycamore Partners for a potential sale. This deal could value the British retailer at up to $10 billion (£7.8 billion). The talks come amid a steep decline in Walgreens’ valuation, dropping from a peak of over $100 billion in 2015 to just $7.5 billion recently. The announcement of these discussions was first reported by The Wall Street Journal and resulted in a 20% increase in Walgreens’ share price during late trading on 11 December.
Sycamore Partners, known for its strategic acquisitions in the retail sector, holds stakes in companies such as Staples and has previously engaged with UK brands like Kurt Geiger and Ted Baker. However, it remains unlikely that Sycamore would purchase Walgreens in its entirety, given their current emphasis on smaller transactions.
Walgreens billionaire chairman, Stefano Pessina, who has been central to the company’s acquisitions over the past two decades, might retain a significant ownership stake in Boots, depending on how the deal is structured. Currently, WBA manages approximately 12,500 pharmacies worldwide, including 1,900 Boots stores across the UK. While the organisation has intermittently considered divesting Boots to concentrate on its core US market, previous sale attempts were halted due to shifting market dynamics.
Despite these challenges, Boots has demonstrated resilience within the market. Recent data shows a notable 6.2% increase in store sales for the quarter ending in August, driven by elevated footfall in urban centres and travel locations. Additionally, pharmacy sales experienced a 10% year-on-year growth due to heightened demand for NHS and private healthcare services. This data reflects Boots’ capacity to perform robustly even amid economic pressures.
The potential sale and ongoing discussions highlight the strategic moves by Walgreens to streamline operations and address financial constraints posed by declining consumer spending and reduced drug reimbursement rates in the US. As the situation develops, stakeholders are closely monitoring how these changes could influence the future operations and ownership of Boots.
The unfolding discussions underscore Walgreens Boots Alliance’s strategic approach to repositioning itself amid financial and operational challenges.
