Boots Gets New US Owner in $10 Billion Deal – Possible Sell-Off Ahead?

Boots’ US owner, Walgreens Boots Alliance, is being acquired by private equity firm Sycamore Partners in a $10 billion deal. The company’s valuation has dropped significantly over the years due to rising debt and growing competition from online retailers. Speculation suggests that Boots may be sold separately by its new owner. Walgreens’ CEO cited challenges in the evolving pharmacy and retail landscape, while experts note that more consumers are purchasing healthcare products online.

Despite its struggles, Boots remains a trusted brand in the UK. The company has been closing stores, with 1,900 locations still operating. Walgreens’ stock rose 6% after the deal announcement but has lost 80% of its value in the past five years. The acquisition is expected to be finalized by the end of the year. Walgreens initially acquired a stake in Boots in 2012 before fully purchasing it in 2014 for £9 billion. The company also owns US retail stores, Shields Health Solutions, and VillageMD. In 2022, Walgreens attempted to sell Boots but abandoned the plan due to potential buyers facing funding issues.

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• Walgreens Sells Boots in $10 Billion Deal, Putting 50,000 UK Jobs at Risk

Boots Gets New US Owner in $10 Billion Deal – Possible Sell-Off Ahead?

The US-based owner of the Boots pharmacy chain is being acquired by private equity firm Sycamore Partners in a $10 billion (£7.8 billion) deal.

The sale price for Walgreens Boots Alliance is significantly lower than its valuation a decade ago, reflecting financial struggles, rising debt, and the increasing preference of shoppers for online retailers offering lower prices.

There is speculation that Boots may be sold separately by Sycamore Partners. Walgreens’ CEO, Tim Wentworth, acknowledged the challenges of the rapidly changing pharmacy sector and the competitive retail environment. He stated that while progress has been made in the company’s turnaround efforts, substantial value creation would be more effectively managed as a private business.

Investment expert George Godber noted that Boots has changed ownership multiple times and has faced difficulties with its business model as more consumers purchase personal healthcare products online.

Catherine Shuttleworth, CEO of Savvy Marketing, highlighted that Boots had recovered from a difficult period and remains a highly trusted brand with a strong presence in the UK. However, she acknowledged that reports of a potential sale could create uncertainty for employees.

Currently, 1,900 Boots stores remain in the UK after the company started closing outlets in mid-2023 as part of a restructuring plan.

Sycamore Partners is purchasing Walgreens Boots Alliance shares at $11.45 each, above their current market value. Following the announcement, Walgreens’ stock rose nearly 6% in after-hours trading, though its market value has declined by about 80% over the past five years.

The deal is expected to be finalized by the end of the year. Walgreens initially acquired a 45% stake in Boots in 2012 before fully purchasing the company in 2014 in a transaction worth around £9 billion.

Aside from Boots, Walgreens also operates its own US retail stores, specialty pharmacy Shields Health Solutions, and healthcare provider VillageMD. The company has faced increasing competition from lower-cost rivals.

In 2022, Walgreens attempted to sell Boots but abandoned the plan due to potential buyers struggling to secure sufficient funding. In October, Walgreens announced plans to close 1,200 US stores over three years as part of a cost-cutting initiative.

Boots’ US owner, Walgreens Boots Alliance, is being acquired by private equity firm Sycamore Partners in a $10 billion deal. The company’s valuation has dropped significantly over the years due to rising debt and growing competition from online retailers. Speculation suggests that Boots may be sold separately by its new owner. Walgreens’ CEO cited challenges in the evolving pharmacy and retail landscape, while experts note that more consumers are purchasing healthcare products online. Despite its struggles, Boots remains a trusted brand in the UK.

The company has been closing stores, with 1,900 locations still operating. Walgreens’ stock rose 6% after the deal announcement but has lost 80% of its value in the past five years. The acquisition is expected to be finalized by the end of the year. Walgreens initially acquired a stake in Boots in 2012 before fully purchasing it in 2014 for £9 billion. The company also owns US retail stores, Shields Health Solutions, and VillageMD. In 2022, Walgreens attempted to sell Boots but abandoned the plan due to potential buyers facing funding issues. In October, Walgreens announced plans to close 1,200 US stores over three years as part of a cost-cutting initiative.

The decision is aimed at improving efficiency and addressing financial struggles amid declining sales and rising operational costs. Store closures will primarily target underperforming locations, and Walgreens is also focusing on digital expansion and alternative healthcare services. The company has been investing in partnerships and restructuring efforts to strengthen its market position, but the competitive landscape remains challenging.

Walgreens Sells Boots in $10 Billion Deal, Putting 50,000 UK Jobs at Risk

The US owner of Boots is set to go private in a $10 billion (£7.8 billion) transaction, adding further uncertainty for thousands of employees at the UK pharmacy chain.

Walgreens Boots Alliance, which operates over 1,800 Boots stores across the UK, has been acquired by the US private equity firm Sycamore Partners. The retailer has struggled in recent years as consumers increasingly turn to online shopping for more affordable products.

Walgreens’ market capitalization has plummeted by 90% since 2015, now standing at $9.3 billion, with total debt and lease obligations amounting to $30 billion. Sycamore Partners has agreed to purchase Walgreens Boots Alliance at $11.45 per share, valuing the company’s equity at approximately $10 billion.

Following the acquisition, Sycamore is expected to retain Walgreens’ US retail business while selling or spinning off other divisions, including Boots. The UK pharmacy chain, which traces its origins back to John Boot’s first Nottingham store in 1849, employs over 50,000 people, many of whom now face uncertainty over its future ownership.

In a letter to employees, Walgreens’ international business chief, Ornella Barra, acknowledged the significance of the deal but reassured staff that no immediate changes would occur.

Walgreens previously attempted to sell Boots in 2022, seeking up to £10 billion, but abandoned the plan due to difficulties in securing buyers. Potential bidders, including Mukesh Ambani’s Reliance Industries, private equity firm Apollo Global Management, and Asda’s parent company TDR Capital, were unable to raise sufficient funds. A subsequent plan to list the business at a valuation of around £7 billion was also shelved last year.

Analysts expect Sycamore to quickly seek a private equity buyer for Boots to generate returns. However, challenges such as rising costs, low consumer confidence, and economic uncertainty could make a sale difficult.

Despite these challenges, Boots has improved its pricing strategy, closed hundreds of underperforming stores, and expanded its beauty product offerings to align with shifting consumer preferences. Additionally, the Labour government’s focus on strengthening primary healthcare could position pharmacies like Boots for a more significant role.

Retail analysts suggest that a successful sale will depend on Sycamore’s willingness to accept a lower valuation than Walgreens previously sought. Patrick O’Brien of GlobalData noted that while Boots has improved, past valuations were excessively high relative to its revenue and profits.

Nick Bubb, an independent retail analyst, believes that Boots has the potential to be floated on the stock market but anticipates an IPO attempt only in late 2026, given that Sycamore’s acquisition of Walgreens is not expected to be finalized until the last quarter of this year.

Walgreens first invested in Boots in 2012, acquiring a 45% stake for £4.3 billion before completing a full buyout in 2014. However, the company has struggled in recent years, announcing job cuts and store closures during the COVID-19 pandemic and shutting down an additional 300 stores by the end of last year as part of its restructuring efforts.

The transaction will mark the end of Walgreens’ 98-year run as a publicly traded company, though the firm still has a 35-day window to entertain rival bids.

As part of the deal, Walgreens’ executive chairman and largest shareholder, Italian billionaire Stefano Pessina, will retain a minority stake in the company. Barra informed staff that Pessina would remain a key stakeholder alongside Sycamore.

The Pharmacists’ Defence Association (PDA) expressed concerns about the acquisition, warning that employees may fear a repeat of what happened with LloydsPharmacy, which was dismantled and sold off to independent operators.

Walgreens, once valued at $100 billion following its 2014 merger with Alliance Boots, has seen its worth decline due to the growing dominance of e-commerce and increased competition in the retail and pharmacy sectors.

Walgreens CEO Tim Wentworth stated that the company is navigating a rapidly changing pharmacy landscape, facing mounting challenges in an increasingly competitive market.