Walgreens arranges Goldman Sachs row to explore options for UK Boots chain

The Walgreens Boots Alliance is arranging advisors to explore options including the sale of Boots, five years after it took full ownership of the UK retail pharmacy chain.

Goldman Sachs will be asked to examine the operation of the Boots chain, founded in Nottingham by a Methodist family in 1849, potentially through a private sale or listing.

Private equity groups have bought UK retail properties this year, with TDR Capital participating in the February acquisition of supermarket chain Asda and Clayton, Dubilier and Rice fending off competition from Fortress due to SoftBank backed to gain control of Wm Morrison, another grocer, in October.

Boots was a UK-listed company until 2007, when it was taken private by Italian pharmaceutical magnate Stefano Pessina and private equity group KKR, when it was a leveraged acquisition. UK’s largest trap.

Walgreens subsequently acquired the company in two phases, complete the process in 2016, with Pessina becoming the chief executive officer of the expanded group.

Earlier this year, Walgreens appointed Roz Brewer as chief executive officer, with Pessina serving as executive chairman. Brewer signaled a stronger focus on U.S. health care, and the group sell its distribution business to Amerisource Bergen.

Chicago-based Walgreens said it was “correct” that it “announced a new set of strategic priorities and directions” [in] October, which includes a stronger focus on North America and healthcare.”

But they added that they “do not comment on market speculation” and that Boots was “an important part of the team”.

Sky News first reported that Goldman was lined up.

Some investors have questioned the synergy between Boots and its US parent company, as the stores are mostly located on different continents and don’t have the same product mix.

Critics also say Boots has lost its distinctive character under private and US ownership, with its stores becoming increasingly rundown and understaffed.

Neil Saunders at GlobalData said the Walgreens merger “gave little support” and that it was “underinvested and focused on areas like stores and services”.

“Walgreens has brought Boots down to its level, which is completely the wrong outcome.”

But Boots has one of the UK’s leading retail loyalty schemes with more than 14 million active members and a highly protective pharmacy business that dispenses up to 2,000 prescriptions a week instead. for the UK’s state health service.

Sebastian James, Boots CEO since 2018, has implemented a program to close about 200 surplus stores, has ramped up its online offering and invested heavily in new format aesthetic hall designed for the reception of department stores.

Boots was also affected during the UK’s Covid-related closure, with many of its pharmacies remaining open to dispense prescriptions but retail activity – which typically accounts for around three-fifths of sales – fell.

In the year to August 2020, it posted a loss of £245 million compared with a profit of £198 million the year before. It was also attacked by some landlords for what they see as an aggressive stance in renegotiating rents.

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