Boots is set to be sold in a £8billion deal as its US owner, Walgreens Boots Alliance, looks to offload the high street chain amid a wave of UK store closures.
The sale to private equity firm Sycamore Partners comes as Boots continues to shrink its presence, having already shut hundreds of stores as part of a major cost-cutting strategy.
An announcement could be made as soon as this week, according to Bloomberg.
The deal raises significant questions about the future of Boots on UK high streets, where it currently operates around 1,800 shops.
After the takeover, Sycamore is expected to split the British pharmacy chain into a separate company. This has fueled speculation that Boots could be floated on the London stock market.
A move like this could help the London Stock Exchange, which has struggled to attract new companies.
Boots shared 16 stores will shut next yearPABoots, which merged with Walgreens in 2014, has since become a sought-after takeover target.
In recent years, the company has reshaped its UK store network, closing 300 stores by the end of 2024 as part of a plan to shut 650 outlets, first announced in June 2023.
The closures have reduced Boots' presence from 2,200 shops to approximately 1,800 nationwide. Despite these reductions, Boots remains a dominant force on British high streets.
The streamlining has reportedly made the business leaner and more attractive to potential investors. Retail experts view Boots as an attractive investment opportunity following its recent performance.
LATEST DEVELOPMENTS:
Boots reported a strong first quarter, with total retail sales up 8.1 per cent year-on-year for the three months ending November 30, 2024. Growth was seen across all categories and channels, building on last year’s strong performance.
Boots.com saw a surge in online sales, rising 23 per cent year-on-year, now making up 22 per cent of total retail sales.
Last year the company noted that airport stores performed particularly well, benefiting from recent refurbishments.
Meanwhile, digital sales surged by 13.8 per cent, boosted by investments in the Boots app, which offers personalized deals to shoppers.
Boots also saw stronger growth in its pharmacy division, with sales rising 5.8 per cent as more customers used its healthcare services.
Jonathan De Mello, boss of the JDM Retail Consultancy, said: "This acquisition would no doubt lead to them selling or more likely taking public, Boots.
"Boots has performed well over the past few years and is a leaner business overall now with fewer stores and staff, and no pension scheme liability. A stock market listing of Boots could potentially be quite attractive for investors at this point."
Retail analyst Nick Bubb described Boots as 'very floatable' following a post-pandemic boom in health and beauty.
Walgreens has faced significant challenges in recent years, with its market value declining by 80 per cent. The company's US retail business has struggled with weak consumer spending amid high inflation. Its pharmacy operation has also been hit by low reimbursement rates for filing prescriptions.
The potential Sycamore deal may separate Boots, Walgreens, and Shields Health Solutions from Walgreens Boots Alliance
GETTYTim Wentworth, who became chief executive in 2023, has implemented a £1billion cost-cutting plan. His strategy includes removing multiple mid-level executives and closing 1,200 stores over three years.
The potential Sycamore deal comes after a previous unsuccessful attempt to go private in 2019. Sycamore Partners may separate Boots, Walgreens, and Shields Health Solutions from Walgreens Boots Alliance, potentially turning them into standalone companies or listing them on the stock market.
The potential London listing of Boots would mark a significant return to the UK market for the 175-year-old retailer. A flotation could capitalise on Boots' strong recent sales performance and streamlined operations.
For UK consumers, splitting from Walgreens could mean a stronger focus on the British market. However, uncertainty remains over Sycamore’s long-term strategy for the pharmacy chain.
