May 30, 2022
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Reliance could be front-runner to buy Boots as Asda owners mull walking away

May 30, 2022

A consortium of India's Reliance Industries and private equity firm Apollo could become the front-runner to buy the Boots chain from Walgreens Boots Alliance (WBA) after the other major bidder is believed to be on the verge of walking away from any deal.


The exit of the Issa brothers – who control the Asda UK supermarket chain – would come after the billionaire retailers indicated they aren't prepared to pay the up-to-£7 billion asking price, according to a report by Bloomberg.

WBA put the UK health and beauty retail chain up for sale as part of its focus on its core US market. 

The powerful position of Boots in the UK meant a premium price tag was always likely. However rising interest rates and Russia's invasion of Ukraine have complicated the issue with buyers increasingly nervous about raising debt to acquire businesses of this type.

Boots has faced some tough times in recent years, but while it appears to be getting back on track, with 2,200 shops and many of its locations requiring refurbishment, it will take a major commitment on the part of its new owner to get it up to scratch. 

The Issa brothers and TDR Capital, who own Asda together, saw a Boots buy as a way to improve Asda’s pharmacy services and this could therefore have meant multiple Boots store closures with branches being integrated into Asda superstores.

Bloomberg said they’d been asked to raise their offer and are considering pulling out of the process.

WBA is reportedly seeking between £6 billion and £7 billion for Boots but the Issas are only prepared to pay £5 billion. WBA reportedly aims to retain a stake in Boots and it’s unclear whether the price the Issas are prepared to pay is linked to the as-yet-unknown size of this stake.

Sources have said that they’re keen not to over-pay in the current tough environment and that the £8 billion Boots pension scheme remains a concern.
But The Times also said that their lack of enthusiasm could be a negotiating tactic.

That said, the sources have suggested that the Reliance consortium could have the advantage of its Indian strength with plans to expand the chain into the country. That would be appealing for WBA given that it’s hanging on to a stake in the business.

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