Financial Times reports that Walgreens Boots Alliance has engaged Goldman Sachs as advisors to explore options of the U.K. Boots chain. The speculation is that the chain may be sold, since Roz Brewer, CEO, wants to focus on U.S. health care.
Walgreens has already sold to Amerisource Bergen its distribution business and it has indicated that its renewed priorities are in North America and specifically on health care. One must recognize that Roz Brewer joined the company earlier this year with a mandate to strengthen the operation.
The history of Boots was reported by The Financial Times. Boots was founded I 1849 in Nottingham by a Methodist family. It was a listed company until 2007 when it was taken private by Italian pharmacist magnate Stefano Pessina and KKR
I note that Boots has great U.K. loyalty from its customers and each of its pharmacies dispense an average of 2,000 prescriptions per week. It also has newly designed beauty departments which the Boots management hopes to compete with department stores. Nonetheless, Boots suffered from the coronavirus COVID—19 lockdown. While the Boots stores remained open to dispense prescriptions, which account for about three-fifth of sales, the retail business declined. FT reports that in the year ended August 20, the company had an operating loss of £245 million ($ 326 million) while it had in the previous year’s profit of £198 million ($263 million).
Boots was also attacked by some British landlords over what they considered an aggressive stance on renegotiating rents during the pandemic.
According to the Financial Times, there is confirmation of Goldman Sachs being hired to explore the options for Walgreens, the company did add that Boots was an important part of the group.
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POSTSCRIPT: I have never understood why Walgreens management saw their business as a global opportunity for growth. I applaud the move to seek a solution on how to divest Boots and break up the Alliance. Walgreen can grow and add more to their sales offerings, including hearing aids and more eyeglass service. I think Roz Brewer is on the right track. I could also visualize that the company develops a department store alliance.