An Indian billionaire has joined forces with US private equity to try and takeover Boots.
Mukesh Ambani’s conglomerate Reliance Industries and Apollo Global Management tabled an offer that values the High Street chemist at between £5.5billion and £6billion.
The move has made the pair front-runners in the race for Boots after it was put up for sale by its American owners Walgreens Boots Alliance in December.
Fortune: Mukesh Ambani’s conglomerate Reliance Industries and Apollo Global Management tabled an offer that values Boots at between £5.5bn and £6bn
Walgreens, which is run by Italian billionaire Stefano Pessina and his wife Ornella Barra, was hoping for £7billion. But a number of other potential bidders, including Bain Capital and CVC, have already walked away.
A rival consortium of the Issa brothers and their private equity backers TDR Capital – who together own Asda – has also cooled on the idea following disagreements over price.
A deal with Reliance and Apollo would leave Walgreens retaining around a third of Boots, which was started by John Boot in 1849 and now has 2,200 shops, 550 opticians and more than 50,000 staff.
A winning bidder could be picked in the coming weeks.
If successful, Reliance and Apollo would look to launch Boots in India and expand it across Asia.
It would also extend the Reliance retail footprint built up by Ambani, who is India’s richest man and owns supermarkets, electronics stores and fashion chains as well as historic London toy shop Hamleys.
- 1849: Founded in Nottingham by Quaker John Boot
- 1935: Launched itsNumber Seven, now No7, beauty range
- 1985: Received a Queen’s Award forthe discovery and development of ibuprofen
- 2006: Merged with Alliance UniChem to form Alliance Boots
- 2007: Alliance Boots bought by private equity giant KKR
- 2014: Sold to Walgreens to form Walgreens Boots Alliance
- 2021: Administered its first Covid vaccine
- 2021: Put up for sale by US owner Walgreens
Ambani, 65, has been expanding into retail as he shifts the Reliance group’s focus beyond oil and chemicals. Apollo is a New York-based private equity group managing £70billion worth of assets around the world. It was a contender in the private equity bidding wars for Morrisons and Asda but lost out on both deals.
Former front runners to take over Boots included Asda owners Moshin and Zuber Issa. They teamed up with TDR Capital on a bid but got cold feet when Walgreens asked for a higher price.
A source close to the process said the Issas were expected to file an offer this week, but it is unclear if they will do so and they have not officially pulled out.
‘It is definitely a one or two horse race,’ the source said.
If the Issas do not file a rival bid, Reliance and Apollo will enter talks about the Boots pension fund and a deal could be finalised by September.
Other potential bidders included private equity firm Sycamore Capital Partners. Walgreens also kept the door open to a float, but this was thrown into doubt amid market turmoil after Russia’s invasion of Ukraine.
The turbulence has led to Walgreens missing out on the £7billion price tag it was hoping for when it kicked off the sale process.
Pessina put the UK business run by his wife up for sale as part of a strategic review to increase Walgreens’ focus on US healthcare.
But Reliance and Apollo’s takeover will be the biggest deal to happen in the UK since the war broke out and suggests private equity firms are still on the prowl despite economic uncertainty.
Chris Beckett, head of equity research at Quilter Cheviot, said: ‘The news that Walgreens appears to have found a buyer for Boots brings to an end some uncertainty for the company.
Power couple: Boots American owner Walgreens is run by Italian billionaire Stefano Pessina and his wife Ornella Barra
‘Walgreens is a complicated business that is in transition, and this disposal would allow it to focus on the US pharmacy market and provide a wider range of healthcare services to existing customers.
‘Boots is a material part of the company as a whole, but certainly not the whole story, hence they are comfortable selling the majority of it off to a third party. The price offered is also possible lower than initially hoped for by Walgreens.’
He suggested Walgreens ‘wants to move now and get on with its growth plans, rather than hold out for a better price’.
So who are the bidders for UK’s top pharmacy?
The joint bid for Boots brings together the world’s sixth richest man and one of the most notorious private equity houses.
Tycoon Mukesh Ambani runs the sprawling Indian conglomerate Reliance Industries, founded in 1966 by his late father Dhirubhai.
The massive empire has £60billion in annual sales through businesses spanning petrochemicals, oil and gas, telecoms and retail.
Reliance’s focus has historically been on oil and gas but Ambani has recently invested heavily in renewable energy and wants India to become a green energy superpower.
The empire also includes India’s biggest retailer Reliance Retail, which includes grocers, fashion outlets and electronics stores.
And Ambani has been beefing up Reliance’s presence in consumer goods and technology and in 2019 bought toy store Hamleys for £68million.
The 65-year-old has a string of interests outside of Reliance including Football Sports Development, which owns the Indian Super League, the country’s top tier football league.
He has a fortune of £83billion, according to Forbes, and as of yesterday was India’s richest person and the sixth wealthiest in the world.
He is married to philanthropist, art collector and the owner of the Indian Premier League cricket team Mumbai Indians, Nita Ambani. The couple have two sons, Akash and Anant, and a daughter, Isha, who is Akash’s twin.
Isha’s 2018 marriage to billionaire Ajay Piramal’s son drew 10,000 guests, including Hillary Clinton.
Ambani has teamed up with New York-based private equity giant Apollo, which manages £70billion worth of assets around the world. Apollo was founded in 1990 by Leon Black, Marc Rowan, Antony Ressler and Josh Harris.
Black stepped down last year from all his leadership roles at the firm following an outcry after revelations he paid Epstein $158million between 2012 and 2017 to handle art transactions and give tax advice.
Apollo has invested £450million in Czech lottery operator Allwyn, which in March was named as the preferred bidder to run the National Lottery by the Gambling Commission.