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Boots on the table - what happens next?

A charming glow up for Boots this week courtesy of some very attractive results - it's looking amazing. So what next? A float? A sale? 

You hear mixed reviews of the Boots estate, as you'd expect of a business being dusted down and spruced up for something. Gleaming double-storied wonders juxtapose with tired stores in unloved high streets. The knackered ones will continue dropping off as the streamlined Boots continues to rev up.

Read more: Boots reports 60% profit spike as sales surge

It might be about to hit turbo. A possible sale, being handled by Goldman Sachs, or an IPO are said to be next. Why? Because owner Walgreens Boots Alliance needs to do something drastic to combat an ailing stock price. So which is likely?

A floatation is thrilling and lucrative at best. Fraught and complex at worst. WBA will view a sale as more palatable. ‘Talk’ of a floatation is different. That’s saying how amazing it could be - in the right hands. All part of the preening process.

Read more: Revealed: Locations of 245 Boots store closures over the last year

A sale is a sensible option. It would be a satisfactory day for WBA, if not a celebratory one. WBA has a net debt of $8.8bn – around the price it would like to fetch for Boots. It might have to lower those expectations. Selling off a chunk of the family silver never feels good, but expect its share price to reflect city approval if it does strike a deal.

So who might buy it?

The Issa brothers came up fast during the noughties in eye-catching style. Talk of rich lists and sibling spats distract from the fact that they are two of the sharpest businessmen in British corporate history. They carved their way into the upper echelons of UK retail with Euro Garages, which imported colourful USA-style gas stops into spaces previously occupied by grubby UK petrol stations. They rapidly grew the concept. Euro Garages ballooned following a £1.5bn investment by TDR Capital in 2015.

The rest is retail history. They walked the walk (without doing a lot of talking) when forecourts were written off as doomed. Now you can’t move inside one without knocking over a special offer. They breathed new life in.

There aren’t many obvious parallels between forecourts and pharmacy, but everyone will always need petrol, and everyone will always need pills. It’s what you can upsell around them that matters.

Read more: Thousands of Boots pharmacists to be offered dermatology training

They then upgraded to doing business with the US giants themselves, buying Asda from Walmart in a £6.8bn deal in 2020. They had wanted to buy Boots. It didn’t happen. Perhaps WBA wanted too much money, perhaps diplomacy could have been more agreeable between all parties. But money has a way of seeing past all that.

If they can raise the money at a time when they are looking to reduce debt, they could merge the two. Break Asda into UK high streets in a big fast way. Simultaneously utilise the empty Asda space in its out-of-town supermarkets, some of which are over 100,000 sq. ft, for generously proportioned pharmacy first services, skin care, hearing, aesthetics, basic first aid, etc, etc. Affordable private healthcare.

Stargazing stuff, evolutions happen gently. Boots has longevity whatever happens to it next. Frankly it’s nice to see any business doing well for itself. Whatever happens next.

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