Boots, the US-owned high street pharmacy chain, is considering a £7bn UK IPO. This could give London’s struggling stock market a needed boost.
Walgreens Boots Alliance, which abandoned its plan to sell Boots two years ago, is believed to be considering options for the 174-year old UK company.
Boots management is pushing Walgreens towards an initial public offering. This would be a return to the London Stock Exchange after a 16 year hiatus.
Seb James is the managing director at Boots. He has extensive experience in running public companies, having served as the chief executive officer of Dixons Carphone (now Currys), the electronics retailer listed on the London Stock Exchange.
This comes only weeks after Boots sold its pension scheme for £4.8bn to Legal & General. Boots’ pension scheme, one of the largest in Britain with 43,000 members was viewed as an obstacle to potential investors or suitors.
Bloomberg, the first to report the talks, expects Boots to be valued at approximately £7bn. This would bring the company back to the FTSE 100.
Alliance Boots, a blue-chip company, was acquired by KKR for £11.1bn in a leveraged buyout in 2007. Walgreens merged with Boots for a total of £9bn. Walgreens Boots Alliance has been listed in the US.
The discussions are still in the early stages and it is not certain that a sale or listing will occur. Boots’ spokesman declined to comment.
Boots’ listing would be one of the largest in London for years, and a major victory for UK markets as it fears that the UK is falling down the global rankings.
The travel giant Tui was the latest company to announce that it is considering exiting the London Stock Exchange. This follows a string of high-profile departures, including the building materials firm CRH, and the plumbing equipment supplier Ferguson.
The Financial Conduct Authority released data last week showing that the number of London Stock Exchange listings is at its lowest level for at least six-years.
Between January and November 23, this year, only 56 companies submitted applications to list their shares at the LSE main market. The number of companies that submitted applications was far below the 125 in 2021.
Walgreens considered selling Boots in the past, but abandoned that plan due to “unexpected changes” on the financial markets. Walgreens had been in discussions with Wall Street buyout firm Apollo, Indian billionaire Mukesh Amani, CVC, and Bain.
Walgreens executives are being urged to focus the company on its US operations by spin-offing its international operations in recent months. Tim Wentworth, a healthcare industry veteran, was appointed as Walgreens’ new CEO in October.
Walgreens announced last month that it would cut $1bn in costs from its American operations. Walgreens has also reduced the number of its stores in the UK. Walgreens has a goal to reduce the number of stores in the UK to 1,900. Walgreens is targeting stores that are too close together.
The US healthcare giant reported a $3.1bn loss in its last financial year, down from $5.5bn the year before, due mainly to a charge related to opioid claims and litigation.
Boots’ performance in the UK, however, was better. It reported a retail sales increase of 11.7pc for the fourth-quarter. Boots’ sales increased by 12.5pc in the last year, up to the end August.
This was due to an increase in footfall at shopping centres and travel shops, despite the cost of living weighing heavily on customers.
Boots, a family-owned business founded by John Boot in 1849 in Nottingham as a way to provide herbal remedies for the poor and those who couldn’t afford to buy traditional drugs.
It has been a pioneer in the UK high-street since then. In 1925, its Piccadilly Circle store opened the UK’s first and only 24-hour pharmacy. In 1951, it was one of the very first stores to offer self service. It had 2,200 shops in the UK as of June, but plans to reduce this to 1,900 by next summer.
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