Boots could be spun out if Walgreens buyout goes ahead - report

The UK retailer is part of Walgreens Boots Alliance, which is understood to be in talks with US private equity firm Sycamore Partners, a specialist in retail assets.

Walgreens has around 12,500 outlets in the US, Europe and South America. But it has been rocked by high inflation and stiff competition, and slumped to a $8.6bn loss in the most recent fiscal year.

It has already announced plans to shut stores, but according to multiple media reports, including the Financial Times and Wall Street Journal, it is now in potential takeover talks with Sycamore.

The New York-listed retailer currently has a market value of around $8bn.

However, according to Sky News, Sycamore will likely spin off Boots if it succeeds in taking Walgreens private.

The 175-year Nottingham-based retailer, which has around 1,900 stores and employs 52,000 people, was acquired by Walgreens in 2014.

Previous owner Stefano Pessina, the veteran Italian dealmaker who orchestrated the sale to Walgreens, retains a 17% stake and is likely to be a potential bidder should it come to market, Sky News noted.

Pessina combined Boots with his own pharmacy business in 2006 to create Alliance Boots, before teaming up with US private equity firm KKK to take the then blue chip private. Walgreens took an initial 45% stake before buying Boots outright.

Private equity firms are also likely to be interested, however, including Apollo Global Management.

A number were understood to be interested in 2022, when Walgreens was last considering selling Boots. Apollo and India’s Reliance Industries were understood to be putting together a possible £5bn joint offer when Walgreens terminated the sale process.

So far neither Pessina, Walgreens nor Sycamore have commented.