Boots deal in the balance as banks stop lending

US-based private equity giant Apollo and India’s Reliance Industries tabled a joint bid for Boots earlier this month, which was more than £1bn below owner Walgreens’ £7bn asking price.

Asda owners the Issa brothers and TDR Capital have also been linked with a move, but doubts have emerged after debt markets have closed. 

Mohsin and Zuber Issa are both still reportedly interested in a move for Boots, but are finding it increasingly difficult to raise finance, according to the Sunday Times. 

Apollo and Reliance Industries have raised finance from investment banks, albeit at much higher interest rates than last year. 

The war in Ukraine, spiralling inflation and interest rates have pushed up the costs of borrowing, with financing in retail particularly hard to come by due to softening customer demand. 

Walgreens had previously explored the possibility of a separate float for the Boots business, but the turmoil in the markets makes such a move unlikely in the short-term at least. 

Boots’ American owners are expected to update the market on the state of the sale when it publishes its third quarter sales on June 30.

Even if Walgreens were to accept an offer for the business, it would still need to agree a deal with the trustees of Boots’ £7bn pension fund. 

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