Boots bought by US private equity in $10bn deal
The owner of Boots has been snapped up by a US private equity group in a takeover deal worth $10bn (£7.7bn).
Walgreens Boots Alliance, which has owned the UK pharmacy chain since 2014, will be bought by Sycamore Partners after a steep decline in its share price over the past decade.
Its new US owner will pay $11.45 per share – an 8pc premium to Walgreens' closing price in New York on Thursday night.
However, the price paid is a far cry from the $85 a share the company commanded in 2015, when the business was valued at more than $90bn.
Walgreens, which employs 311,000 people globally, has struggled in the face of competition from online retailers, as well as weaker payments from health insurers.
The company's share price has nearly halved over the last year.
The swoop by a private equity firm will raise the spectre of potential store closures, including at Boots. Industry chiefs have warned cuts to NHS funding have made running chemists less attractive.
Dr Leyla Hannbeck, chief executive of the Independent Pharmacies Association, said: 'The new buyers of Boots are private equity and if the current NHS community pharmacy funding contract remains as poor as it is now – a stagnated funding which for nearly six years did not take into account any rising costs and inflation – then the new buyers may wish to let go of some of the Boots pharmacies that are not making them money.'
On Friday, Ornella Barra, Walgreens' head of international, sought to reassure staff, telling them 'nothing is changing'.
In a company-wide email, Ms Barra said: 'Sycamore's interest in Boots in the UK and Ireland (including our opticians business) globally reflects its confidence in the important role we play for our customers, patients, colleagues and communities.'
She urged staff to 'concentrate on executing against your current projects and remain focused on your day-to-day'.
Sycamore currently owns the US stationery retailer Staples, which it bought for $7bn in 2017, and the American restaurant chain Playa Bowls.
It has previously held a stake in the women's footwear brand Kurt Geiger and in 2022 it made a series of offers for Ted Baker.
The deal is expected to be completed in the fourth quarter of this year and also includes a 'go-shop' period, initially set for 35 days, when Walgreens will solicit and potentially evaluate other offers.
Walgreens Boots runs around 12,500 pharmacies across the US, Europe and Latin America. This includes around 1,900 stores which are part of the 174-year-old Boots chain.
The US company repeatedly looked at plans to carve off the Boots business during periods when its own market value waned.
Tim Wentworth, the Walgreens chief executive, said the company's 'ambitious turnaround strategy' would be 'better managed as a private company'.
He said: 'Our trusted brands and deep commitment to our customers, patients, communities and team members have and will continue to anchor our business as we realise our goal of being the first choice for pharmacy, retail and health services.'
Stefan Kaluzny, the managing director of Sycamore Partners, added: 'This transaction reflects our confidence in WBA's pharmacy-led model and essential role in driving better outcomes for patients, customers and communities.'
After the deal was announced, Michael Cherny, a Leerink Partners analyst, said: 'It actually happened.'
He added that he did not expect Sycamore to face a competing bid owing to the size of the deal and various moving parts involved in the takeover.
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