The US owner of Boots is once again exploring options to sell off the UK pharmacy chain, including the possibility of a flotation on the London Stock Exchange.
Walgreens Boots Alliance has engaged in early talks about a separation of Boots that could value the business at £7bn, according to Bloomberg News.
It comes as Boots struck a deal last month to offload its £4.8bn pension scheme to Legal & General, which removed a major obstacle to Walgreens selling or floating the business.
The US listed parent company previously abandoned a sales process for Boots in June 2022, blaming “unexpected and dramatic change” in global financial markets at the time.
Walgreens reportedly wanted £10bn for Boots but pulled the process when the only offer came from a consortium made up of Apollo Global Management and India’s Reliance Industries at £5.5bn.
The Issa brothers, the owners of Asda and EG Group, were also reported at the time to be weighing up a bid but nothing materialised.
Analysts at AJ Bell said putting Boots back on the UK stock market made sense given the geographic focus of the business.
“It would also give the UK market a boost given it’s been a long time since we had a household retail name of this scale float on the London Stock Exchange,” added Danni Hewson, AJ Bell head of financial analysis.
“Walgreens itself has high levels of debt compared to its earnings and it needs to find a way to repair its balance sheet. Floating Boots would enable it to sell some of the business to a new pool of investors and give it an exit path for the future.
“Normally in these situations, the parent company wouldn’t keep the remaining stake in the business for long once it has been floated.”
A recovery at Boots has continued to gain momentum this year, with sales up 11.7% in the fourth quarter. It marked the tenth consecutive quarter of market share growth for the UK business.
“Like many big names on the UK high street, Boots has too many stores and it is now in the process of slimming down its estate to focus on the best performing sites. While it has a strong brand, Boots faces considerable competition in the cosmetics market from online sellers, although the demise of Wilko removes a major rival for the sale of basic healthcare products like deodorants and painkillers.”
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