Walgreens, the largest pharmacy chain in the United States, has abandoned plans to sell Boots, claiming that buyers were unable to raise sufficient funds due to financial market volatility.
Following the sale of Boots in January, Walgreens stated that it had received several offers for the pharmacy business.
However, none of the offers adequately reflected the UK pharmacy chain’s high potential value, according to the company.
The Walgreens Boots Alliance announced that it would retain Boots and the No7 beauty brand.
Potential buyers included Indian billionaire Mukesh Ambani and US buyout firm Apollo Global Management, which made an offer worth around £5 billion.
Boots was valued at around £9 billion at the time of the Walgreens merger.
Walgreens said it was abandoning plans to sell Boots due to an “unexpected and dramatic change” in the financial markets.
“As a result of market instability, which has severely impacted financing availability, no third party has been able to make an offer that adequately reflects the high potential value of Boots and No7 Beauty Company,” the company stated.
Walgreens Boots Alliance CEO Rosalind Brewer stated, “We have now completed a thorough review of Boots and No7 Beauty Company, with the outcome reflecting rapidly evolving and challenging financial market conditions beyond our control.”
“This is an exciting time for these companies, which are uniquely positioned to capitalize on future opportunities in the growing healthcare and beauty markets.”
“The board and I remain confident in the fundamental value of Boots and No7 Beauty Company, and in the long term, we will remain open to all opportunities to maximize shareholder value for these businesses and across our company.”
According to retail analyst Catherine Shuttleworth, Walgreens wanted more for Boots than suitors were willing to pay.
“Boots needs a lot of work,” she admitted.
She claimed that in the current market, raising the necessary funds to purchase it would have been difficult and that Boots has a “significant” pensions liability.
One of the most difficult challenges for Boots, she says, is that comparable products can be purchased from competitors such as supermarkets and online retailers.
Furthermore, while Boots used to get a lot of “lunchtime trade” from people working in city centers, more people were now working from home.
Boots has 2,200 UK stores and has been in business for 173 years.
As a result of the Covid-19 pandemic, Walgreens cut 4,000 jobs at Boots and closed some of its stores in 2020.