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Boots auction pulled as debt costs rise for private equity bidders


Boots was initially valued at as much as £8bn

Boots was initially valued at as much as £8bn

Boots was initially valued at as much as £8bn

The owner of the Boots pharmacies business has scrapped a plan to sell the chain, saying no third party was able to make an adequate offer due to the turmoil in global financial markets.

Walgreens Boots Alliance's move to call off the sale comes as private equity bidders Apollo Global and TDR faced headwinds in raising financing for the deal, several sources have said.

Banks were wary of underwriting large chunks of the financing due to tough market conditions.

Boots was initially valued at as much as £8bn (€9.26bn) with the auction process being led by Goldman Sachs, sources said in February.

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.

In Britain, supermarket chain Morrisons' £7bn takeover by US buyout fund CD&R is the most notable debt-financing deal to have hit a snag due to a delay in raising $6.6bn to fund the deal.

Walgreens had put its Boots 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 shops in Ireland and 2,200 stores in the United Kingdom, including pharmacies, health and beauty stores.

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