Walgreens Boots Alliance: Boots in play

The US pharmacy giant Walgreens is pondering a sale of Boots, potentially undoing the “blockbuster transatlantic merger” engineered by the Italian billionaire Stefano Pessina in 2014, said Aaron Kirchfeld on Bloomberg. Goldman Sachs has reportedly been hired to advise on “a review of options” for the British health and beauty retail chain – including a sale or a separate listing – enabling Walgreens “to focus on its North American business”.

At 80, Pessina (nicknamed the “silver fox” for his hair and dealmaking nous) remains the group’s chairman and biggest shareholder, but this year he handed the reins of the alliance to CEO Roz Brewer. The “spry” Italian once dreamt of dominating “wholesale and retail pharmacy in Europe, the US and even China”, said Alex Brummer in the Daily Mail. Boots, with its coveted No. 7 beauty brands, “would help spearhead the assault”. It hasn’t quite worked out that way.

The sale would mark an “abrupt exit” for Walgreens, which paid $22bn to acquire Boots from Pessina and the private equity group KKR in 2012-2014, said Robert Cyran on Reuters Breakingviews, but it “probably makes sense”. Neither chain has flourished and “with private equity snatching up British assets, it’s a good time to sell”.

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Founded in Nottingham in 1849, Boots has had a rough 21st century since losing its standalone status in 2005, said Ben Marlow in The Daily Telegraph. The debt-laden chain shrivelled to become a “distant and forgotten outpost” of the Walgreen empire, “starved of investment”. Under “more nurturing management”, Boots might have evolved into an online health and beauty Goliath. Yet the company’s sales halved at the height of the Covid crisis. There’s an opportunity here to revitalise an old “stalwart”. Let’s hope it “ends up in the right hands”.