Boots’ rumoured $10billion (£7.8billion) sale to a private equity firm has now been confirmed, following the closure of 300 stores. Its US owner, Walgreens Boots Alliance (WBA), will be taken over by Sycamore Partners, which paid $11.45 (£8.89) per share, a fraction of its value a decade ago.
The British high-street giant was valued at around £9billion in 2014 when Illinois-based Walgreens took over the remainder of the store, after initially taking a 45% stake in 2012. It comes after Boots announced cost-cutting plans to shut 650 outlets across the UK in June 2023 which were considered unprofitable or too close to other shops. By the end of 2024 it had closed 300 stores, drastically reducing its presence on the high street from 2,200 shops to around 1,900.
Tim Wentworth, chief executive of Walgreens, which has had its own financial struggles, said it is navigating the “challenges of a rapidly evolving pharmacy industry and an increasingly complex and competitive retail landscape.”
Walgreens is undertaking a £ 1 billion cost-saving exercise after its market value declined by 80% due to high inflation impacting customer spending and low reimbursement rates for filing prescriptions.
Wentworth said that while they were making progress against their ambitious turnaround strategy, the private firm will “provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds”.
He added that it “provides shareholders premium cash value” and thanked the 311,000 team members across Walgreens and Boots, who for 175 years “have been integral to the lives of patients and customers”.
Catherine Shuttleworth, chief executive of Savvy Marketing, acknowledged it could be a difficult time for staff: “Any uncertainty over your ownership is going to make you quite concerned if you work for Boots.”
Boots’ figures have improved since its cost-cutting exercise, largely driven by online sales, its app, and its pharmacies, which experts said made it a more attractive investment.
Between September and November 2024, total retail sales were up 8.1% year-on-year. Online sales rose by 23% year-on-year, digital sales surged by 13.8% following investment in the app, and pharmacy sales also rose by 5.8%.
Stefan Kaluzny, Managing Director of Sycamore Partners, said: “Sycamore has deep respect for WBA’s talented and dedicated team members, and we are committed to stewarding the Company’s iconic brands.
“This transaction reflects our confidence in WBA’s pharmacy-led model and essential role in driving better outcomes for patients, customers and communities.”
Although unconfirmed, there has been speculation that Sycamore could split Boots into a separate company from Walgreens and Shields Health Solutions, and place it on the London stock market.
The deal is expected to be completed by the end of this year.