Debt-Market Jitters End Walgreens' Multibillion-Dollar Boots Sale

The sale of one of the UK’s largest retail property occupiers has been called off, with banks balking at funding a huge leveraged buyout amid current market uncertainty.

U.S. pharmacy giant Walgreens Boots Alliance has abandoned the £5.5B sale of UK pharmacy chain Boots. 

Boots has more than 2,200 UK stores, about 200 of which were scheduled for closure before the pandemic. The failure of the sale calls into question the level of ongoing investment the chain will receive from its current owner, Sky said. 

A joint venture between private equity firm Apollo Global Management and Indian firm Reliance Industries was the only party left in the running to buy Boots, with a bid from TDR Capital and EG Group having fallen away earlier this year.

Apollo and Reliance had lined up a quartet of banks to fund the deal: Royal Bank of Canada, Credit Suisse, Santander and Bank of America. But the volatility affecting global financial markets caused lenders to withdraw from the deal. In particular, high inflation will have a detrimental impact on consumer spending. 

Walgreens bought Boots from KKR in two deals between 2012 and 2013, paying about £11B for the company. It is selling Boots to concentrate on its home market.

During lockdowns, Boots was at loggerheads with landlords over unpaid rent. As a pharmacist, Boots was allowed to remain open during lockdowns, but it did not pay full rent on all of its stores. Landlords said it used the UK eviction moratorium to avoid paying rent even though it was able to trade.

Boots said that even though it remained open, its trading was severely restricted.