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Bidders for Boots, Britain’s biggest high street chemist, are grappling with options for tackling huge pension liabilities guaranteed by the chain’s current owner.
Sky News has learnt that private equity firms which tabled indicative offers for Boots this week have been informed that Walgreens Boots Alliance (WBA) wants to offload the guarantees – which are said by retail executives to be worth billions of pounds – to a new owner.
At approximately £8bn, Boots’ pension scheme is one of the largest private retirement funds in the UK.
Although it is well-funded, private equity insiders say that the Boots pension trustees are expected to seek substantial additional funding as part of any leveraged buyout of the business.
A deadline for initial offers for Boots expired on Thursday, with at least three bidders understood to have submitted offers.
These are said to have included the financiers who own Asda, US-based Sycamore Partners and a consortium comprising Bain Capital and CVC Capital Partners.
Sky News revealed earlier this year that Bain and CVC had joined forces to bid for Boots, with the chain thought to be valued by WBA at between £5bn and £6bn.
CVC’s involvement is significant because of the key role played by Dominic Murphy, one of its team of managing partners and an architect of the £11bn takeover of Alliance Boots by KKR – the private equity firm he previously worked for – in 2007.
Mr Murphy, who remains a director of Walgreens Boots Alliance, Boots’ US-listed parent company, is recusing himself from boardroom discussions about the potential sale of Boots as a result of his interest in the process at CVC.
Boots trades from more than 2,000 stores and employs more than 50,000 people, making it one of the UK’s biggest private sector employers.
The sale process is being run by Goldman Sachs.
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Source : skynews
