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WBA rumoured to be ‘reviving’ £7bn Boots sales talks

Boots’ parent company is looking at listing the £7 billion UK pharmacy chain on the stock exchange, Bloomberg has reported.

Walgreens Boots Alliance (WBA) is said to be considering the move as part of “early talks” on how to divest the health and beauty giant, which “could be valued at about £7bn”, according to a Bloomberg report on Tuesday (December 12).

According to the report, which cites “people with knowledge of the matter”, Boots’ parent company is “reviving” its effort to “offload” the multiple over a year after it called off a potential sale.

Read more: Boots UK: Parent company decides against selling pharmacy chain

A spokesperson for Boots said that the multiple would not be commenting on the speculation. C+D has also approached WBA for comment.

In June last year, WBA revealed that it could not find prospective buyers that were able to make it an offer “that adequately reflects the high potential value” of Boots and the company’s No7 Beauty brand.

Read more: Boots UK parent company ‘open to opportunities' after sale called off

It followed months of sales rumours as WBA reportedly struggled to find bidders that could raise enough capital to meet its valuation of Boots UK – also said to be £7bn at that time.

Since the sale was called off, Boots announced mass closures in July, with 300 branches marked for winding up over the course of a year.

 

“Preliminary discussions”

 

Bloomberg’s report suggested that WBA has engaged in “early talks” to take the UK’s largest community pharmacy chain off its books, with an initial public offering on the London Stock Exchange under consideration.

While the media outlet noted that WBA could “opt to invite fresh offers” for Boots UK instead, replicating last year’s attempted sale, it said high interest rates would make a sale “difficult”.

Nevertheless, the report said that there was “no certainty” that WBA’s “preliminary” discussions on the sale would lead to Boots’ sale or listing.

Read more: Boots offloads pension scheme for £4.8bn amid fresh sales rumours

The report also noted that the sale of Boots’ pension scheme had removed “a stumbling block” to a potential sale. 

Last month (November 28), C+D reported that WBA had made a £4.8bn deal to hand over responsibility for all Boots pensions to financial service provider Legal and General (L&G) over the next two years.

But the Pharmacists’ Defence Association (PDA) announced earlier this month (December 7) that it had approached the pensions ombudsman because the deal could lead to a pension reduction for Boot’s employees wishing to withdraw their pension before they turn 65. 

In October, Boots revealed that it had achieved a solid fourth quarter, with “both pharmacy and consumer health sales growing year on year”.

Read more: Boots reports 'strong' last quarter as parent company reveals $3.1bn net loss

The multiple’s pharmacy sales increased 9.9% compared with last year’s fourth quarter, while comparable retail sales increased by 11.7%.

This came as WBA’s financials showed it had suffered a loss of $3.1bn this fiscal year.

In the same month, WBA appointed Tim Wentworth as its permanent chief executive, joining the company at a “pivotal time” as it “focuses on right-sizing the business, while…creating greater value for employees, patients, customers and shareholders”.

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