Reliance Industries Ltd. (RIL) and US-based Apollo Global Management Inc, which have jointly bid to acquire UK pharmacy chain Boots, have inched closer to acquiring the company, controlled by Walgreens Boots Alliance.
The consortium has made a binding offer for the drugstore chain, Bloomberg reported, adding that backed by committed financing, the offer has valued the company at $6.3 billion.
If the deal goes through, it will be the largest cross-border acquisition by Mukesh Ambani-owned Reliance. The consortium was in talks with global financial biggies to fund the deal, according to the report.
With the acquisition of Boots—which is a popular pharmacy brand in the UK, Ambani is aiming to expand RIL’s presence in the country, a market that has been his recent favorite with the previous acquisition of Hamleys in 2019, and battery technology firm Faradion in 2021.
Walgreens has been seeking a valuation of about £7 billion for Boots, people with knowledge of the matter have said. The business runs a network of more than 2,200 stores across the UK, as well as private-label brands like No7 Beauty Co. and operations in a smattering of other countries.
Behind the Deal
Ambani, who is one of India’s richest people with a fortune of more than $100bn (£79.7bn) according to Forbes, is chair of Reliance Industries, the group founded by his father that has interests in petrochemicals, oil and gas, telecom and retail.
Apollo has long been interested in the UK retail market. It lost out on Asda to the billionaire Issa brothers in 2020, lent money to former Topshop boss Philip Green as he tried to rescue his retail empire and previously owned jewellery retailer Watches of Switzerland. It also backs the Alteri fund, which bought the Missguided online retailer shortly before it went into administration.
It is not clear if the UK-based Issa brothers and their private equity partner TDR Capital, who recently bought Asda and own a string of petrol forecourts, will launch a rival bid.
Two of the world’s biggest private equity funds, CVC and Bain Capital, had considered a bid but are understood to have stepped back as they were not prepared to pay more than £4bn.
The pharmacy and beauty retailer’s current owner, US group Walgreens, which has controlled Boots since 2012, is expected to keep a minority stake under the deal.
Walgreens’ ongoing interest comes after concerns about the funding of Boots’ pension fund for which the US group is understood to underwrite guarantees worth billions of pounds.
The Nottingham-based retailer and pharmacist, which has more than 2,000 outlets and employs about 55,000 people, has had a tough time in recent years as it has struggled to deal with an ageing store portfolio as retailing shifts online.
While the group was deemed an essential retailer and was therefore able to trade during the pandemic high street lockdowns, its stores suffered from low visitor numbers while neighbouring businesses remained closed.
In 2017, WBA sold off the Boots manufacturing business to the France-based specialist Fareva, including the Nottingham factory that it opened in the 1930s. In 2019, Boots said it would close up to 200 stores over two years.