Walgreens shelves pharmacy Boots’ sale as market turmoil hits dealmaking

Folks stroll by a Walgreens, owned by the Walgreens Boots Alliance, Inc., in Manhattan, New York Metropolis, U.S., November 26, 2021. REUTERS/Andrew Kelly

June 28 (Reuters) – Walgreens Boots Alliance (WBA.O) on Tuesday scrapped the plan to promote its UK excessive road pharmacy chain, Boots, saying no third occasion was capable of make an sufficient provide as a result of turmoil in international monetary markets.

Walgreens’ transfer to name off the sale comes as personal fairness bidders Apollo World (APO.N) and TDR confronted headwinds in elevating financing for the deal, a number of sources informed Reuters, as banks have been cautious of underwriting massive chunks of the financing on account of powerful market situations.

Boots was initially valued at as a lot as 8 billion kilos, or $10.88 billion, with the public sale course of being led by Goldman Sachs (GS.N), sources informed Reuters in February. learn extra

World financial uncertainty and rising inflation have triggered a spike in rates of interest as central banks have rushed to take motion in probably the most widespread tightening of financial coverage for greater than 20 years, making deal financing costlier and tougher to entry. learn extra

In Britain, grocery store chain Morrisons’ 7-billion-pound takeover by U.S. buyout fund CD&R is probably the most notable debt financing deal to have hit a snag on account of a delay in elevating $6.6 billion in debt to fund the deal.

Walgreens had put its Boots enterprise up on the market after asserting a strategic evaluate in January because the second-largest U.S. pharmacy chain renewed its concentrate on home healthcare.

The corporate mentioned the choice to retain Boots and No7 Magnificence Firm was additionally underpinned by their ongoing robust efficiency.

Brokerage Evercore ISI mentioned the announcement was not a shock, noting it was seemingly disappointing to the administration group that had hoped to refocus the corporate on its U.S. pharmacy and healthcare companies.

“We see a possible future sale as nonetheless seemingly inside the subsequent few years if macro surroundings turns into extra secure,” Evercore mentioned in its observe.

The 173-year-old Boots enterprise contains 2,200 shops in the UK, together with pharmacies, well being and sweetness shops.

Reporting by Mrinalika Roy and Ankur Banerjee in Bengaluru, Pamela Barbaglia in London;
Enhancing by Vinay Dwivedi

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