Australian pharmacy giant Sigma Healthcare has withdrawn from negotiations over a £7.5bn private takeover of Boots, rekindling hopes that the high street pharmacy chain could pursue a London stock market flotation.
The Australian firm announced on Monday that a deal with Boots would fail to meet its investment objectives, leaving the billionaire Weston family as the sole party remaining in sales discussions with the high street pharmacy.
Exclusive Talks with the Westons
It emerged last week that Sycamore Partners, the private equity firm which owns Boots, had been in preliminary talks with both Sigma and the Westons since before Easter. Sigma's exit, however, leaves only the Westons in contention, with their Canadian operations — which encompasses grocery chain Loblaws and pharmacy business Shoppers Drug Mart — continuing discussions with the British firm.
News of Boots' private sale talks had already dealt a significant blow to prospects of a £7bn London listing, which would have marked the retailer's return to the FTSE after its departure in 2007, as reported by City AM.
Sigma's Strategic Decision
Sigma's withdrawal from the negotiations, first reported by Reuters, would have considerably expanded the Australian pharmacy firm's footprint in the UK market as part of its broader international expansion ambitions. However, the firm stated on Monday: "Sigma has many opportunities for growth and is confident in its established growth strategy, with a primary focus on the Australian market."
Shares in the Australian-listed healthcare firm surged six per cent on the news of its withdrawal from talks, reaching 2.8 Australian dollars. Sigma's exit leaves only the Westons, the largest shareholders of FTSE 100 conglomerate Associated British Foods, still in discussions with Boots.
IPO Preparations Underway
Sycamore Partners, which acquired Boots's owner Walgreens Boots Alliance for $23.7bn last year, continues to lay the groundwork for a potential London listing, even as sale talks remain ongoing. This IPO, first mooted in April, would deliver a significant boost to the London Stock Exchange, as policymakers seek to reverse a recent slump in listings by easing tax and regulatory burdens.
A London float would value Boots at approximately £7bn, marking the high street pharmacy's return to the public markets for the first time in nearly two decades.
Boots' History and Performance
Boots was established as a family herbal medicine shop in Nottingham in 1849 and now operates more than 1,800 stores across Britain. The business was previously listed in London as part of Alliance Boots, before becoming the first FTSE 100 company ever to be acquired by a private equity firm back in 2007.
Last week, Boots revealed its pre-tax profit had surged by 25 per cent to £337m in the year to August, ahead of its private acquisition. Retail sales climbed by nearly six per cent as revenue rose by three per cent to £7.5bn. Boots declined to comment.
