Walgreens pulls plug on Boots sale as suitors fail to secure financing

The US giant said that no interested party had made an offer that “adequately reflects the high potential value of Boots” and its No7 beauty brand. 

Walgreens insisted it had received “significant interest from prospective buyers” and had been “encouraged by productive discussions” with potential bidders. 

But it blamed “unexpected and dramatic change” in global financial markets for “severely impacting financing availability”.

Walgreens said it was now “in the best interests of shareholders to keep focusing on the further growth and profitability of the two businesses”. 

The health and beauty titan effectively hoisted the ‘for sale’ sign over Boots back in January when it launched a strategic review of its operations in the UK and Ireland.  

A number of potential buyers had been circling the retailer, including Asda owners the Issa brothers, and a consortium fronted by CVC Capital Partners and Bain Capital.

US-based private equity giant Apollo and India’s Reliance Industries had emerged as front runners with a joint offer, but their bid, tabled earlier this month, is understood to have fallen more than £1bn below Walgreens’ £7bn asking price.

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 also considered spinning off Boots on the public markets, but those have also been hammered by the uncertain global economic and political landscape.

Walgreens said it will now “continue investing in the future” of Boots and No7. 

Its chief executive Rosalind Brewer said: “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. 

“It is an exciting time for these businesses, which are uniquely positioned to continue to capture future opportunities presented by the growing healthcare and beauty markets. 

“The board and I remain confident that Boots and No7 Beauty Company hold strong fundamental value, and longer term, we will stay open to all opportunities to maximise shareholder value for these businesses and across our company.”

• Don’t miss the best of the week – sign up to receive the Editor’s Choice every Friday