Boots CEO mulls private equity buyout - reports

By

Sandra Halliday

Published
Nov 6, 2019

There’s talk this week that the CEO of Boots owner Walgreen Boots Alliance could be planning to take the company private in what could potentially be the biggest leveraged buyout in history.

Various reports have suggested that the company has been talking informally to private equity firms, although no sources for the reports have been cited and the company has no made no comment on them.

The CEO, Stefano Pessina, is WBA’s biggest shareholder with a stake estimated at around 16%.

The giant operation has a market value of around $55bn/£49bn/€43bn and private equity firm KKR is being suggested as a potential buyer. Pessina worked with KKR before on the 2007 acquisition of Alliance Boots. But it's unclear whether a buyout would get off the ground and some newspapers have quoted unnamed sources saying that a number of buyout firms have already been reluctant to participate in any deal.

The logic of being once more under private equity control is clear as it would allow WBA the opportunity to address its problems away from the glare of being a listed company and the need to issue sales and earning reports on a quarterly basis.

Those problems include heavy pressure from online rivals such as Amazon and the increasing popularity of the beauty segment for both specialist retailers, multi-category retailers such as supermarkets and fashion retailers.

In the UK, Boots retains its status as the top health and beauty retailer and also has a very strong online operation. But its market share is being eroded by a hugely competitive environment and the company is cutting back its bloated store estate with plans to shut a  large number of shops. In the US, WBA faces similar pressures.

Overall, WBA is the biggest retail pharmacy operation in the US and Europe, with almost 19,000 stores in 11 countries. It’s a giant multi-brand beauty retailer, but also owns brands such a No 7, Soap & Glory, Liz Earle and Botanics.

As well as closing shops, it’s also focusing on improving key locations and UK CEO Seb James is driving the strategy that sees it opening experience-based beauty halls, such as the recent Covent Garden, London store.

The company is also launching No 7 and other brands into China via an online Boots store on Tmall Global.