Boots, the biggest beauty retailer and pharmacy chain in the UK, is an icon of British identity in spite of passing into American ownership five years ago. Earlier this year, Retail Beauty reported that Walgreens Boots Alliance, one of the world’s largest retail, pharmacy and drugstore wholesale companies, had hired global investment bank, Goldman Sachs, to sound out buyers for the potential sale of Boots for up to US$10 billion.
The 172 year old retailer initially attracted the attention of private equity giants, Bain Capital and CVC Capital Partners, but both pulled out of the race because of the hefty price tag.
The deadline for offers exceeding US$8 billion passed last week and left three major bidders interested in acquiring Boots, in addition to its No 7 beauty business and UK license for Mothercare – Asda, the British supermarket chain, and American private equity majors Apollo Global Management and Sycamore Capital.
Boots operates 2200 stores worldwide and boasts a huge online business. The Covid-19 crisis dented the company’s fortunes, but a turnaround is well underway with a major growth increase in the final quarter of 2021.
The British media has been speculating that the successful bidder will be Asda, the fourth largest supermarket chain in the UK. Last year, the company itself was acquired by Mohsin and Zuber Issa, the billionaire petrol station owners, for AUD$12.22 billion – the largest leveraged buyout in the UK for over a decade.
In a similar scenario to the Wesfarmers buyout of Priceline, The Competition and Markets Authority (CMA), the British equivalent of Australia’s ACCC, would have to green light an Asda takeover of Boots because of the supermarket chain’s large beauty and personal care retail business.