Apollo, Reliance make $6.3-billion binding offer to buy UK drugstore chain Boots

Walgreens Boots Alliance’s negotiations with Apollo and Reliance currently have the most momentum, said people in the know. Their proposal values Boots at more than £5 billion ($6.3 billion).

A pedestrian walks by a Boots store on Oxford Street, London | Photo: Simon Dawson | Bloomberg

Mumbai/London: A consortium of Apollo Global Management Inc. and Reliance Industries Ltd. has made a binding offer for Walgreens Boots Alliance Inc.’s international arm, people with knowledge of the matter said.

The buyout firm and Indian conglomerate submitted a bid for the Boots drugstore chain this week that’s fully backed by committed financing, the people said, asking not to be identified because the information is private. Their proposal values Boots at more than £5 billion ($6.3 billion), the people said.

Reliance, controlled by billionaire Mukesh Ambani, may be looking to tap its expertise in emerging markets to wring further growth out of the British high street staple. Ambani, who is one of India’s richest men, is in the midst of pivoting his traditionally refining-focused conglomerate toward businesses that will better help him tap the country’s billion-plus consumers.

Walgreens’ negotiations with Apollo and Reliance currently have the most momentum, the people said. Their main competitor in the bidding, a consortium of Britain’s billionaire Issa brothers and TDR Capital, submitted a non-binding offer in recent weeks, Bloomberg News has reported. They remain interested in Boots, though their proposal is lower than what Apollo and Reliance offered, the people said.

Apollo and Reliance have offered to let Walgreens keep a stake in the business after any deal, according to the people. A winning bidder could be picked as soon as the coming weeks, the people said.

Deliberations are ongoing, and there’s no certainty they will lead to a transaction. Representatives for the bidding groups and Walgreens declined to comment.

Walgreens has been seeking a valuation of about £7 billion for Boots, Bloomberg News reported earlier. The business runs a network of more than 2,200 stores across the UK, as well as private-label brands like No7 Beauty Co. and operations in a smattering of other countries.

The Boots sale has emerged as a litmus test for dealmaking in the UK as credit markets become increasingly fragile. The easy financing conditions that supported a series of debt-fueled takeovers of British companies last year have mostly come to an end. Banks that funded the private-equity buyout of Wm Morrison Supermarkets Plc had to sell some of the debt at a steep discount.- Bloomberg