Asda owners eye £10bn Boots takeover: Deal would add more than 2,000 pharmacies to billionaire Issa brothers’ growing shops empire

Supermarket giant Asda is considering a takeover of high street stalwart Boots after its US owner Walgreens put the pharmacy chain up for sale.

Asda is owned by Blackburn-based brothers Mohsin and Zuber Issa who have stunned the City with an acquisition spree, buying up more than 6,000 petrol station forecourts around the globe as well as the supermarket giant 15 months ago.

The Nottingham-based chemist chain would provide Asda, which mainly operates large supermarkets and hypermarkets, with an extensive network of more than 2,000 pharmacies in cities and towns across Britain. 

Sign of the times: The possible sale of Boots has already attracted a flurry of interest from private equity firms

Sign of the times: The possible sale of Boots has already attracted a flurry of interest from private equity firms

The possibility of buying Boots – which employs 50,000 staff and is said to be worth as much as £10 billion – is understood to have been discussed at a senior level. 

The discussions are believed to be at an early stage and it is not yet clear whether Asda bosses have made a decision to proceed. 

The possible sale of Boots has already attracted a flurry of interest from private equity firms. There has been talk of a joint bid from two of the world’s largest such companies – Bain Capital and CVC Capital Partners. 

A formal auction of Boots – founded by the Quaker John Boot in 1849 – is likely to begin in the coming weeks when information on the chain has been distributed among parties that have expressed an interest. 

It is possible that Walgreens may yet decide against going ahead with a sale or could choose to spin the chain off as a separately listed company on the stock market. 

Grocery industry sources said other supermarket groups have shown an interest. The Boots chain would offer a wider store network that could be used to provide drop-off points for online businesses in local high streets. 

One senior supermarket source said: ‘It’s in play and everybody will be looking at it.’ 

Another industry veteran said the proposals would almost certainly be passed to the Competition and Markets Authority if a supermarket giant attempted to complete a deal. 

A merger between Sainsbury’s and Asda was blocked three years ago, which could leave retail chains cautious about trying to force through another high-profile takeover. 

‘Like Boots, supermarkets have big health and beauty ranges so the CMA would take a look,’ said one senior supermarket source. 

Boots was snapped up in 2007 by Italian dealmaker Stefano Pessina and private equity giant KKR in a blockbuster deal at the height of that decade’s buyout frenzy. The billionaire now sits on Walgreens’ board and has a 16 per cent stake in the US drugstore group. 

Goldman Sachs has been lined up by Walgreens to sell the Boots chain, which it bought in two stages between 2012 and 2014. 

Estimated valuations circulating around the City vary significantly and range from £5billion to £10billion. 

Boots, among the largest retailers in the country, is run by Sebastian James, who has presided over a period of renewed investment in the business. Walgreens revealed strong trading figures at Boots earlier this month. 

However, critics say that many of its network of stores are long overdue a makeover which is likely to prove to be a headache for any buyer. 

The Issa brothers have already triggered an overhaul of Asda by inviting retailers including bakery chain Greggs and sports shop Decathlon to open outlets inside their supermarkets. The brothers’ own takeaway chain Leon, which they bought last year, also operates inside some Asda stores.

The brothers are planning to open more convenience stores at sites operated by their petrol forecourt business EG Group. They have also promised to invest £1billion to improve the Asda business over a three-year period. 

Morrisons was snapped up by US private equity giant Clayton, Dubilier & Rice in the autumn. The acquisition of Asda and Morrisons has triggered speculation that other megadeals in the retail sector could follow. 

Other large private equity firms expected to consider a buyout of Boots include Apollo Global Management and Majestic Wine’s majority owner Fortress Investment Group. Apollo and Fortress both missed out on the buyout of Morrisons supermarkets last year. 

Apollo also attempted to buy Asda in 2020, while Fortress went on to purchase pub group Punch last month in a deal worth as much as £1billion. 

Asda declined to comment. 




BAE Systems reveals full extent of its contribution to economy as UK’s defence industry comes under siege from foreign bidders

BAE Systems revealed the full extent of its contribution to the economy as the UK’s defence industry comes under siege from foreign bidders. 

The contractor supported 143,000 British jobs and generated more than £10billion for UK GDP in 2020, according to research by Oxford Economics. 

This is the equivalent of 0.5 per cent of the entire British economy. 

Centre of attention: BAE Systems supported 143,000 British jobs and generated more than £10billion for UK GDP in 2020

Centre of attention: BAE Systems supported 143,000 British jobs and generated more than £10billion for UK GDP in 2020

The company employs 35,300 people in the UK – with more than 40 per cent of its staff based in deprived local authorities. 

Britain’s biggest defence group and many of its rivals have been credited with playing a key role in the levelling-up agenda. 

But the wider defence and aerospace industry has been targeted by a raft of foreign buyers – with firms including Cobham, Ultra Electronics and Meggitt falling prey to bidders in multi-billion pound deals. 

Business Secretary Kwasi Kwarteng will face a major test of his approach to takeovers in sensitive industries next week when he is presented with a report by the Competition and Markets Authority (CMA) into the £2.6billion swoop on Ultra Electronics by private equity giant Advent International. 

Kwarteng ordered the CMA to investigate the deal last year. 

Politicians and experts have urged the Business Secretary to block or place tight restrictions on the Ultra tie-up because the company makes critical equipment such as submarine-hunting sonobuoys that could be key to ensuring Britain’s security in the seas in the coming years. Tory grandee Lord Heseltine, former head of the Royal Navy Admiral Lord West and Defence Committee chairman Tobias Ellwood are among those who have criticised the Ultra deal. 

Ministers were handed powers to intervene in foreign takeovers earlier this month. The National Security and Investment (NSI) Act forces the Government to scrutinise deals in 17 sensitive industries. 

This includes energy, artificial intelligence, nuclear, space and advanced robotics. 

The takeover of artificial intelligence specialist Blue Prism was waved through by shareholders this week, likely becoming one of the first deals to be called in under the act. Ultra’s investigation began under previous legislation, the Enterprise Act of 2002, so it will not be considered under the NSI laws. BAE is one of just two companies – along with Rolls-Royce – that cannot be sold to foreign bidders because the Government owns a so-called ‘golden share’. The £18billion company has 50 sites in the UK and a worldwide workforce of around 90,000. It exported £3.9billion of goods and services in 2020 – equivalent to 0.7 per cent of all UK exports. 

Charles Woodburn, BAE Systems chief executive, said: ‘The investment we make in highly skilled jobs, research and development and our extensive supply chain supports thousands of companies and tens of thousands of people and the communities in which they live.’ 

Minister for defence procurement Jeremy Quinn said BAE was ‘helping us level up the country by supporting tens of thousands of jobs’.