Fri. Jan 21st, 2022


Private equity groups Bain Capital and CVC Capital Partners have teamed up to work on a planned bid for Boots after its US owner hired advisers last month to explore options for the UK’s main street pharmacy chain, including a sale.

The buyout groups are jointly considering an approach, two people with knowledge of the matter said, although talks were at an early stage and it was possible that no offer would materialize. No formal process has yet kicked off, one of the people added.

Bain and CVC believe Boots can be run more profitably as an independent company than an outpost of the Chicago-based Walgreens Boots Alliance and that it can grow by expanding its digital operations, the people said.

Walgreens Goldman Sachs compiled last year to look at splitting up Boots and either selling it or listing it as an independent company.

Bain and CVC declined to comment. Sky News first reported that the two are working together.

CVC has a history of owning high street retailers in the UK, after buying Debenhams with TPG and Merrill Lynch Private Equity in 2003, before being listed three years later. The private equity groups made huge profits on the deal, but they became a target for fraud when the retailer later struggled because they piled up debt at the company and sold its stores.

The American private equity group KKR took Boots private in 2007, together with the Italian pharmacy magnate Stefano Pessina, in what was at the time the UK’s largest leverage buyout.

Dominic Murphy, one of the key figures behind KKR’s takeover of Boots, is now a managing partner at CVC.

Walgreens bought a 45 percent stake in Boots in 2012 and took control of the pharmacy chain in 2014, with Pessina as CEO. Last year, Walgreens Boots Alliance appointed Roz Brewer as CEO, with Pessina becoming CEO.

Private equity groups have snapped up several major UK-based companies over the past few years, with Clayton, Dubilier & Rice buying supermarket chain Morrisons and TDR Capital buying Asda along with brothers Mohsin and Zuber Issa.

In the year to August 2020, Boots made an operating loss of £ 245 million compared to a profit of £ 198 million the year before. The retailer suffered during Covid-related restrictions, when retail activity declined even though pharmacies were open to issue prescriptions.

Walgreens completed the $ 6.5 billion sale of a majority stake in its Alliance Healthcare business in June 2021, a move that helped it reduce debt by about $ 2 billion, mitigating the impact of the pandemic, according to Fitch Ratings .



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