The sole bidder to make a firm offer to Boots, Britain’s largest drugstore, is pinning its hopes on a quartet of lenders even as jitters mount in global debt markets over large-scale takeover deals.
Sky News has learned that a consortium including Apollo Global Management and Indian giant Reliance Industries has brought together Royal Bank of Canada, Credit Suisse, Santander and Bank of America to fund a large part of the £5 billion-plus acquisition .
People close to the deal, on which RBC is also advising the consortium, insisted on Wednesday it remains on track even as doubts grow about the lenders’ commitment to the deal.
A city source suggested the funding commitments looked “shaky.”
Financing markets have plummeted since Boots was listed for sale by New York-listed parent Walgreens Boots Alliance a few months ago.
Part of the Apollo Reliance deal would be funded by equity, the insider said, although it’s unclear how much debt Boots would face if sold.
The WBA may also retain a significant minority stake in Boots to push the deal through.
Another likely bid from Asda’s owners – Mohsin and Zuber Issa and TDR Capital – remains uncertain.
WBA, which is advised by Goldman Sachs, has ruled that the UK pharmacy chain is no longer a core business as it refocuses on its domestic operations.
Other challenges bidders face include overcoming difficult financing markets as well as finding an adequate solution for the 8 billion dollar loan.
If a formal offer is not made at a level acceptable to the WBA board, the company is likely to abandon the sale process.
Sky News revealed earlier this year that what appeared to be an early frontrunner in the boat auction – a joint bid by Bain Capital and CVC Capital Partners – had decided not to proceed amid skepticism over the price tag of up to £6bn.
Like many retailers, Boots has endured a turbulent pandemic and announced it will cut 4,000 jobs in 2020 as a result of a reorganization of its Nottingham head office and store administration teams.
It has also been involved in disputes with landlords over late rent payments.
Just before the pandemic, Boots slated about 200 of its UK stores to close, reflecting changing shopping habits.
Boots’ heritage dates back to John Boot, who opened a herbal medicine shop in Nottingham in 1849.
It opened its 1000th store in Britain in 1933.
For Stefano Pessina, the WBA chairman, the decision to sell Boots outright would mark the final chapter of his involvement with one of Britain’s best-known companies.
The 80-year-old Italian engineered the merger of Boots and Alliance Unichem, a pharmaceutical wholesaler, in 2006, with buyout firm KKR acquiring the combined group for £11bn the following year.
In 2012, Walgreens acquired a 45% stake in Alliance Boots and completed the acquisition of the company two years later.
A spokeswoman for the Apollo Reliance Consortium declined to comment.
Boots contender pins hopes on quartet of lenders as debt market jitters mount | business news
Source link Boots contender pins hopes on quartet of lenders as debt market jitters mount | business news