The owner of Boots has set a mid-May deadline for final bids for Britain’s high street chemist as it battles an array of economic headwinds which threaten to depress its valuation.
Sky News has learnt that Walgreens Boots Alliance’s (WBA) advisers at Goldman Sachs have notified suitors for the chain that it is seeking formal offers on May 16.
The deadline is expected to see fewer than a handful of bids tabled, with some interested parties deterred by WBA’s price expectations and the backdrop of inflation and other cost pressures expected to hamper Boots’ near-term financial performance.
Asda, which is owned by the billionaire Issa brothers and TDR Capital, and Apollo Global Management are among those expected to lodge final offers.
The Indian conglomerate Reliance Industries is not thought likely to table a standalone bid, however.
Among the other challenges facing bidders is how to overcome difficult financing markets, as well as finding an adequate solution for Boots’ £8bn pension scheme – one of the largest private retirement funds in the UK.
Sky News revealed earlier this year that an apparent early frontrunner in the Boots auction – a joint bid from Bain Capital and CVC Capital Partners – had decided not to proceed amid scepticism over the price tag of up to £6bn.
Like many retailers, Boots has had a turbulent pandemic, announcing 4000 job cuts in 2020 as a consequence of a restructuring of its Nottingham head office and store management teams.
It has also been embroiled in rows with landlords about delayed rent payments.
Shortly before the pandemic, Boots earmarked about 200 of its UK stores for closure, a reflection of changing shopping habits.
Boots’ heritage dates back to John Boot opening a herbal remedies store in Nottingham in 1849.
It opened its 1000th UK store in 1933.
For Stefano Pessina, the WBA chairman, a decision to sell Boots would mark the final chapter of his involvement with one of Britain’s best-known companies.
The Italian octogenarian engineered the merger of Boots and Alliance Unichem, a drug wholesaler, in 2006, with the buyout firm KKR acquiring the combined group in an £11bn deal the following year.
In 2012, Walgreens acquired a 45pc stake in Alliance Boots, completing its buyout of the business two years later.
WBA declined to comment.