Walgreens Boots Alliance (WBA) explores sale talks with Sycamore Partners for Boots, potentially triggering a new auction for the British retailer.
- The health and beauty retailer could be valued at up to $10bn (£7.8bn) in the discussions with Sycamore Partners.
- Walgreens shares surged by 20% following news of the potential sale, reflecting investor optimism.
- Sycamore Partners, with past UK investments, may not aim to acquire Walgreens completely due to its focus on smaller deals.
- Walgreens has previously considered selling Boots amid strategic shifts and market pressures.
Walgreens Boots Alliance is reportedly engaged in discussions with American private equity firm Sycamore Partners regarding the potential sale of Boots. This move might lead to a new auction for the well-known British high street chain.
The health and beauty business could be valued at as much as $10bn (£7.8bn) during these negotiations. Walgreens, faced with a declining share price since its peak in 2015, saw a 20% increase in its share value as news of the talks emerged.
Sycamore Partners, recognised for its investment in the US stationery chain Staples and previous stakes in UK retailers such as Kurt Geiger, is involved in the discussions. Despite this, their recent investment strategy suggests it is improbable they would attempt a complete acquisition of Walgreens.
Stefano Pessina, the billionaire chairman and significant shareholder of Walgreens, might retain a considerable stake in Boots depending on the outcome of these talks. Pessina has played a crucial role in the company’s acquisition strategies over the years.
Walgreens operates around 12,500 pharmacies globally, including approximately 1,900 Boots stores within the UK. The conglomerate has consistently examined the possibility of selling or spinning off its Boots operations to focus more intently on its primary market in the US.
In 2022, an attempt to sell Boots for an estimated £7bn was abandoned due to changing market situations. Again, earlier this year, Walgreens reconsidered a sale or a UK listing for Boots but paused those plans mid-year citing strategic importance and financial contributions.
Boots, illustrating resilience despite Walgreens’ financial challenges, recorded a 6.2% increase in store sales during the quarter ending in August. There was also a 10% rise in pharmacy growth, driven by the demand for healthcare services.
Walgreens’ potential sale of Boots to Sycamore Partners could redefine its strategic direction amidst shifting markets.
