Private equity giant Bain Capital pulls out of Boots takeover auction – raising prospect of a London listing
The frontrunner to take over Boots has pulled out of the auction – raising the prospect of a listing in London or a tie-up with Asda.
Boston private equity giant Bain Capital was working on a joint bid for the chemist with CVC Capital Partners, which is based in New York.
But they decided against submitting an offer to owner Walgreens Boots Alliance by the deadline last week.
Out of the race: Boston private equity giant Bain Capital was working on a joint bid for boots with New York-based CVC Capital Partners
It is now thought Asda’s owners, the billionaire Issa brothers and their private equity backers TDR Capital, are leading contenders.
They are working on a plan to take over Boots and combine it with Asda’s stores, which already operate some UK pharmacies.
Apollo Global Management and Sycamore Capital are also said to be interested.
If a sufficient offer does not materialise, a float as a stand-alone firm on the London Stock Exchange could happen.
It would put Boots in line for a spot in the FTSE 100 and make it the biggest London listing since money transfer firm Wise’s £8billion ‘initial public offering’ (IPO) last year.
Boots was founded by Quaker John Boot, selling herbal remedies and now has 2,200 stores and 51,000 staff. It merged with European pharma firm Alliance Unichem in 2006 to become Alliance Boots.
It was then taken over in 2007 by private equity group KKR before merging in 2014 with American giant Walgreens.
Dealmaker: The Walgreens empire was created by Stefano Pessina, now its executive chairman
The Walgreens empire was created by renowned Italian dealmaker Stefano Pessina, now its executive chairman.
It is selling Boots as part of a strategic review, to increase its focus on US healthcare.
Boots struggled through the pandemic, losing £258million in the year to August 31, 2020, and cutting thousands of jobs.
Its sale would be the latest private equity takeover of a British business, many of which are considered to be going cheap. It is thought that offers submitted last week value the chain above £6bn.
Retail analyst Clive Black said a float would probably raise less cash for Walgreens than a sale to private equity or another business.
He said: ‘They can write a big cheque, or do a deal that would have some synergies.
‘I am not sure it is an ideal time to be thinking about an IPO with everything going on.’
AJ Bell analyst Danni Hewson added that a London listing would be a ‘boost’ for British firms.