Walgreen considers sale of Boots

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Twelve years after the alliance between Walgreens and Alliance Boots in 2012, the Anglo-Saxon group could see a substantial redesign. Walgreens Boots Alliance is evaluating potential buyers for the Boots drugstore chain. An operation that could have a value of 7 billion pounds (8.8 billion dollars), according to press reports.

The evaluation of the transfer

The Deerfield-based company would have mandated consultants for a preliminary assessment of the companies interested in the acquisition. This was enough to give impetus to purchases on the stock exchange: the shares of the group, led by Tim Wentworth since October 2023, gained over 7% and then fell back slightly. The stock comes from a non-positive period: since the beginning of the year it has lost over 32% of its value and 42% in the last year.

The 2022 sales attempt

It is not the first time that the group has considered the sale of the British store chain. In June 2022 the sale process was annulled due to the lack of offers deemed to be worthy of Boots’ value. Potential buyers include Indian billionaire Mukesh Ambani and US buyout fund Apollo Global Management, which had submitted an offer valuing the assets at around £5 billion. At the time of the merger, however, Boots was valued at around £9 billion. The sum offered, therefore, was only a little more than half the value of ten years earlier.

The Hypo hypothesis

Rumors about a disengagement of Walgreens Alliance Boots in retail date back to the end of last year, when there was also talk of a potential listing of Boots. The group, which this year halved its dividend and cut its profit estimates, needs to rationalize its structure and raise cash.

In December, moreover, the group had to accept the downgrading of its credit rating to “junk”. The high debt to earnings and risks associated with its healthcare business strategy had prompted Moody’s Investors Service to downgrade the group’s credit rating. Moody’s downgrade brought the rating to Ba2 – two steps towards high yield – reflecting Walgreens’ stubbornly high leverage, weak interest coverage and pressured free cash flow that Moody’s believes will be sustained over the next 12 months. -18 months,” wrote Chedly Louis, senior credit officer.