Apollo Global Management and Reliance Industries of Mukesh Ambani have made a binding bid for the UK chemical chain Boots, said three people with knowledge of the matter.
The bid is valued at between £ 5m and £ 6m, two of the people said.
The deal would allow its parent company Walgreens Boots Alliance to maintain a minority stake. The size of this stake is open to negotiation.
Boots declined to comment.
The funded offer follows months of uncertainty over the sale of the company following the market turmoil caused by the Russian invasion of Ukraine. This has made it more difficult to finance a leveraged purchase, especially as banks have struggled to sell the debt backed by another major UK private equity deal, the acquisition of Wm Morrison supermarket group by Clayton. Dubilier & Rice last year.
Boots’ US parent company put the business up for sale last December to focus on healthcare in its domestic market. But two prominent potential bidders, private equity groups Bain Capital and CVC Capital Partners, abandoned the process in its early stages.
The owners of the British supermarket group Asda, the brothers Mohsin and Zuber Issa and the private equity group TDR Capital, have made a non-binding initial offer, but it is unclear whether they will now make a formal offer.
They are also likely to face significant challenges in securing the necessary funding, as both Asda and EG Group, the gas station operator that made them a fortune, are taking full advantage.
By contrast, Reliance is the largest market capitalization company in India and has a better credit rating than the Republic of India. Ambani is the seventh richest man in the world, according to Forbes.
Apollo and Reliance are likely to try to expand Boots’ business in Asia if they take control of the company, although previous attempts to develop markets outside the UK have had mixed results.
Nottingham-based Boots still generates around 45 per cent of its approximately £ 6bn in annual revenue from the provision of services such as prescriptions and vaccines to the UK State Health Service.
But its retail operations require a significant investment. It has over 2,000 stores in the UK, many of which require an upgrade or are on main streets in distress.
Although it has a trusted brand, some solid branded product lines and one of the UK’s most popular customer loyalty programs, it has been losing market share in some areas.
Supermarkets and “variety discounts”, such as B&M and Home Bargains, have reduced it to commodities such as deodorants, razors and toiletries, while online rivals and department stores are on target. in the beauty market.
An inauguration would have implications for Boots’ defined benefit pension plans. Schemes have a surplus, but they are not enough to insure the purchase of insurance before any transaction. If it retained a minority stake, Walgreens could continue to support the schemes, but the size of Reliance also means it could take responsibility.