Asda owners may drop Boots bid over price concerns
Asda owners the Issa brothers may be about to drop their bid for Boots UK, Bloomberg has reported.
Zuber and Mohsin Issa had teamed up with private equity firm TDR Capital to submit a bid for the UK’s largest pharmacy multiple, but are reportedly planning to exit talks after parent company Walgreens Boots Alliance asked them to increase their offer.
WBA has priced the UK business at £6-£7bn, although it is thought that some interested parties have tabled offers closer to £5bn.
The brothers reportedly expressed strong interest in the multiple in early rounds of discussions, but along with other potential buyers are concerned about Boots’ £8.bn pension scheme, as well as its expectations regarding a sale price.
While there is speculation that the Issa brothers’ present reluctance may be a negotiating tactic, industry sources agree that their interest now hangs in the balance.
If the pair – who bought Asda in 2020 for £6.8bn – walk away from talks this would leave just one interested party remaining, a consortium made up of Indian energy company Reliance Industries and private equity firm Apollo. This deal would see the chain expand into India, Southeast Asia and the Middle East.
A consortium made up of Bain Capital and CVC Capital was previously considered to be the frontrunner to buy the multiple, but it too walked away from discussions in March due to WBA’s price expectations.