US and UK buyout barons join forces in battle for Boots: Bain teams up with CVC in £7bn takeover race
Two of the world’s biggest private equity firms have joined forces to launch a multi-billion- pound bid for Boots.
American buyout barons at Bain Capital and their counterparts at British giant CVC Capital Partners have emerged as frontrunners in the £7billion takeover battle, after teaming up to make a bid.
Boots, which has 2,200 stores and employs 51,000 people, has been attracting attention since its owner Walgreens Alliance Boots hired Goldman Sachs last month to mastermind a sale.
American buyout barons at Bain Capital and their counterparts at British giant CVC Capital Partners have emerged as frontrunners in the £7bn takeover battle for Boots
It was founded in Nottingham by Quaker John Boot in 1849 as a shop selling herbal remedies. It is one of the largest pharmacy chains in Britain and one of the country’s biggest private employers.
Boots merged with European pharma firm Alliance Unichem in 2006 to become Alliance Boots.
It was then taken over in 2007 by private equity group KKR, and merged in 2014 with American giant Walgreens to create US-listed Walgreens Boots Alliance.
Boots has struggled through the pandemic, losing £258million in the year to August 31 and cutting thousands of jobs.
Its sale would be the latest private equity takeover of a British business, many of which are considered to be going cheap.
The pandemic ushered in the plundering of more than 1,200 British firms, snapped up by buyout barons for a total of £92billion, and a sale to private equity will raise fears over store closures and job losses.
Bain is reeling from its failed £530million takeover of British mutual insurer LV. It agreed a deal to demutualise the 178-year-old firm, but after a Daily Mail campaign that was rejected by LV’s 1.2m members.
CVC was part of a consortium that bought Debenhams in 2003. The consortium picked up £1.2billion in dividends before returning it to the stock market less than three years later.
When it bought Debenhams, the retailer had £100million of debt but by the time it was relisted that was £1billion. Debenhams then collapsed in December 2020.
Bain and CVC plan to invest heavily in Boots’s digital, beauty and healthcare offerings, sources told Sky News.
They would carve the UK business out of Walgreens Boots Alliance, where it accounts for about 10 per cent of sales.
They believe it could be run more effectively. One of its attractions is its healthcare services, which played a key part in the rollout of Covid tests and vaccines. Boots has administered more than 3.7m tests.
Talks are at an early stage and it is not certain Bain and CVC will succeed.
Other private equity firms are thought to be interested, including Clayton, Dubilier & Rice, the New York firm that took over Morrisons in October.
It has been suggested that Boots could be spun off and listed in London as a stand- alone business.
Supermarkets Sainsbury’s and Tesco are considered to be potential buyers as they share many customers with Boots. Bain, CVC and Boots declined to comment.