Concerns over Boots auction as buyers struggle to raise finance
There has been speculation that the sale of Boots may collapse as potential buyers face difficulty with lenders as consumer confidence dwindles.
It comes as New York-based private equity firm Apollo and Mukesh Ambani’s Reliance Industries have reportedly proposed an offer of between £5bn and £6bn.
The Sunday Times reported that the joint bid was around £1.5bn below the £7bn that Boots’ US owner Walgreens Boots Alliance (WBA) had hoped for.
The newspaper has also reported there are concerns that a rival bid from Asda owners, the billionaire Issa brothers and private equity giant TDR, may not come to fruition.
The fears come against a backdrop of weakening consumer confidence as shoppers pull back on discretionary spending amid 40-year high inflation.
The Issa brothers have faced a hard battle to raise finance, The Sunday Times stated, quoting a source close to the brothers.
“It’s looking tough. The debt markets are closed,” the source said.
Earlier this year, a consortium made up of private equity titans CVC and Bain withdrew from the race after admitting they would only be willing to cough up £4bn for it.
Ornella Barra, one of the owners of Walgreens Boots Alliance, said earlier this year that an IPO had initially been eyed as a way to spin off the chain, before interest from takeover firms.
“At the beginning we had the idea of an IPO, but we didn’t start the process because the offers came in,’ she told the Daily Mail.
At the time, Barra refused to rule out an IPO for the firm, however, saying “everything is on the table.”
“If the offers (from private equity bidders) are not in line with our expectations we could come back to an IPO.”