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A senior Walgreens Boots Alliance executive has moved to reassure Boots employees following a deal worth up to $23.7bn to take the struggling US pharmacy chain private.
Ornella Barra, who oversees Walgreens’ businesses outside of the US, including UK pharmacy chain Boots, wrote to staff on Friday calling the transaction with private equity group Sycamore Partners “a significant development”, but added it was “important to note that nothing is changing today”.
The email, seen by the Financial Times, comes the day after Sycamore agreed to pay $11.45 a share to take Walgreens private, valuing its stock at a nearly 30 per cent premium to before deal talks were first reported in December and giving it an equity value of about $10bn.
The transaction will set up the group for a three way split, giving Sycamore the flexibility to divide up Walgreens, Boots and speciality pharma unit Shields Health Solutions into independent businesses. That could pave the way for a revival of a possible sale of Boots after previous failed efforts in recent years.
Each of the divisions are set to have separate capital structures, facilitating a potential division, the Financial Times previously reported.
Barra, who is the business partner and spouse of Stefano Pessina, an Italian billionaire and Walgreens’ executive chair, said Sycamore had shown great interest in the international business and was “supportive and confident in the steps we are taking, and in our leadership”, calling the deal “a strategic milestone” for Boots.
“I am confident that this transaction will benefit all our international businesses,” she said, adding that Boots would remain focused on strengthening its position as the leading beauty business after a lengthy turnaround effort.
The Nottingham-based chain, which started life in 1849, has more than 1,800 stores in the UK. Although it provides a fraction of the broader group’s revenue, its performance has recently stood in contrast with its US peers. Total comparable retail sales rose 8.1 per cent year on year in the latest quarter, compared with a 4.6 per cent decline in Walgreens’ US retail sales.
Sycamore and Pessina, who owns 17 per cent of the company and will remain a significant shareholder, are expected to work closely together on future plans for the group, people familiar with the matter said.
Barra told staff that remuneration and benefits remained the same.
Nick Bubb, an independent UK retail analyst, said: “The Boots business looks eminently floatable, but we will probably have to wait until this time next year to see it attempt an [initial public offering] as its new owner, Sycamore, won’t complete the takeover of Walgreens until the fourth quarter this year.”
