Reliance Industries of Indian billionaire Mukesh Ambani has teamed up with US private equity fund Apollo Global Management to make a £ 5bn bid for the British Boots chain.
The US group Walgreens, which has controlled the pharmacy and the beauty retailer since 2012, is expected to maintain a minority stake under the deal.
Walgreens’ constant interest comes after concerns over the funding of the Boots pension fund, more than £ 7bn, one of the largest private plans in the UK, which the US group is understood to subscribe to guarantees worth billions of pounds. It is understood that the administrators wanted substantial additional funding from potential bidders.
A purchase led by Reliance Industries, which already owns the Hamleys toy store and is one of India’s largest retail groups, is expected to lead to expansion in Asia, according to Bloomberg, which first reported offer time.
Ambani, who is one of the richest people in India with a fortune of more than $ 100 billion (£ 79.7 billion) according to Forbes, is chairman of Reliance Industries, the group founded by his father who has interests in petrochemicals, oil and gas, telecommunications and retail.
The Ambani family lives on the block of the 27-story Antilla Tower in Bombay, which was the most expensive house ever built in India.
Reliance is one of India’s largest brick and mortar retailers through the Fresh and Smart convenience store chains, and has been building an online portfolio to complement its position as a leading telecommunications business under the brand name. Jia.
In the UK, the group bought toy retailer Hamleys for £ 70 million in 2019 and last year spent £ 57 million on the 120-hectare (300-acre) Stoke Park estate in Buckinghamshire, which includes a 27-hole championship golf course and a country club. which is being redeveloped.
Apollo has long been interested in the UK retail market, as it is rumored to be interested in Marks & Spencer and the Morrisons supermarket chain. In 2020 he lost to Asda to the billionaire brothers Issa, lent money to former Topshop boss Philip Green while trying to rescue his retail empire, and previously owned the jewelry retailer Watches of Switzerland. It also supports the Alteri fund, which bought online fashion retailer Missguided shortly before it went into administration last month and bought Bensons for Beds in 2020.
Apollo is also a leading retailer worldwide, owning the Casino supermarket chain in France and Albertsons in the United States.
It is unclear whether the UK-based Issa brothers and their private equity partner TDR Capital, which recently bought Asda and own a number of petrol stations, will launch a rival bid. Issa’s interest is believed to have cooled in recent weeks as Asda struggles with a tough grocery market.
Two of the world’s largest private equity funds, CVC and Bain Capital, had considered bidding for Boots, but it is understood they have stepped back because they were unwilling to pay more than £ 4bn.
Walgreens is believed to have initially wanted up to £ 10bn for Boots when it began weighing in on a sale last year, as the group said it had a “renewed set of priorities and strategic direction”, including a more focused approach to North America and health. ”
Boots, founded by the Quaker John Boot in 1849, has been in private hands since 2007, the year after he joined the Alliance Unichem (now Alliance Healthcare) of Italian billionaire Stefano Pessina.
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The Nottingham-based retailer and pharmacist, which has more than 2,000 outlets and employs some 55,000 people, has had a difficult time in recent years as it struggles to cope with a portfolio of aging stores in as retail changes online. In 2019, Boots said it would close up to 200 stores for two years.
Tony Shiret, a retail analyst at Panmure Gordon, said Boots faced competition from supermarkets, discounts like B&M and Savers and a number of new online rivals like LookFantastic and THG’s Cult Beauty.
He said Boots had had little room for the demise of Debenhams and the closure of other department stores that had put a part of the premium beauty market at stake.
But Shiret added: “Boots remains a legacy operator in a market with many new entrants.”
Although the group considered itself an essential retailer and was therefore able to trade during pandemic street closures, its stores received a low number of visitors while neighboring businesses remained closed.
In 2017, the WBA sold the Boots manufacturing business to French specialist Fareva, including the Nottingham factory that opened in the 1930s.