Walgreens defers Boots UK sale; Reliance to look for other opportunities

American retail major Walgreens Boots Alliance on Tuesday said it would retain its pharma retail business —  Boots UK — thus abandoning the entire sale process. The company did  not make any comment specifically on the offer made by Mukesh Ambani-owned Reliance Industries (RIL), which had made a bid for the company last month.

“As a result of market instability severely impacting financing availability, no third party has been able to make an offer that adequately reflects the high potential value of Boots and No7 Beauty Company. Consequently, WBA has decided that it is in the best interests of shareholders to keep focusing on the further growth and profitability of the two businesses,” Walgreens said in a statement.

RIL will continue to look for growth opportunities overseas if good opportunities arise, said company insiders.

“Walgreens has been encouraged by productive discussions held with a range of parties, receiving significant interest from prospective buyers. However, since launching the process, the global financial markets have suffered unexpected and dramatic change,” Walgreens said in a statement.

“As a result of market instability severely impacting financing availability, no third party has been able to make an offer that adequately reflects the high potential value of Boots and No7 Beauty Company. Consequently, WBA has decided that it is in the best interests of shareholders to keep focusing on the further growth and profitability of the two businesses,” Walgreens said.

The US-based company said the decision to retain the businesses had been supported by the strong performance and growth of Boots and No7 Beauty Company, which have exceeded expectations despite challenging conditions.

RIL had made a conservative bid for Boots UK keeping in mind the fears of a recession in the western markets, bankers said. Walgreens was seeking a valuation of about £7 billion ($8.54 billion) for Boots but RIL’s bid was around £5 billion ($6.10 billion). Apart from RIL, billionaire Issa brothers of the UK and TDR Capital had evinced interest in the company, but later backed out.

Boots is the UK’s leading health and beauty retailer and since the formation of WBA at the end of 2014, the US company has significantly invested in Boots and No7 beauty company.

“Given their unmatched assets and unparalleled potential, Walgreens Boots Alliance will continue investing in the future of these two businesses,” the company said. 

“We have now completed a thorough review of Boots and No7 Beauty Company, with the outcome reflecting rapidly evolving and challenging financial market conditions beyond our control. It is an exciting time for these businesses, which are uniquely positioned to continue to capture future opportunities presented by the growing healthcare and beauty markets," Chief Executive Officer Rosalind Brewer said.

“The board and I remain confident that Boots and No7 Beauty Company hold strong fundamental value, and longer term, we will stay open to all opportunities to maximise shareholder value for these businesses and across our company,” Brewer said.