Walgreens Boots Alliance on Tuesday (June 28) scrapped the plan to sell its UK high street pharmacy chain saying no third party was able to make an adequate offer due to the turmoil in global financial markets.
Walgreens’ move to call off the sale comes as private equity bidders Apollo Global and TDR faced headwinds in raising financing for the deal, as banks were wary of underwriting large chunks of the financing due to tough market conditions.
Boots was initially valued at as much as £8bn with the auction process being led by Goldman Sachs.
Global economic uncertainty and rising inflation have triggered a spike in interest rates as central banks have rushed to take action in the most widespread tightening of monetary policy for more than two decades, making deal financing costlier and harder to access.
Walgreens had put its Boots UK business up for sale after announcing a strategic review in January as the second-largest US pharmacy chain renewed its focus on domestic healthcare.
The company said the decision to retain Boots and No7 Beauty Company was also underpinned by their ongoing strong performance.
Brokerage Evercore ISI said the announcement was not a surprise, noting it was likely disappointing to the management team that had hoped to refocus the company on its US pharmacy and healthcare businesses.
“We see a potential future sale as still likely within the next few years if macro environment becomes more stable,” Evercore said in its note.
The 173-year-old Boots business includes 2,200 stores in the United Kingdom, including pharmacies, health and beauty stores.
Along with, Apollo Global and TDR, Indian billionaire Mukesh Ambani’s Reliance Industries was also one of the early bidders for Boots UK.
