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Walgreens suspends sale of boots as market turmoil hits deal funding

By on June 28, 2022 0

People walk near a Walgreens, owned by the Walgreens Boots Alliance, Inc., in Manhattan, New York, U.S. November 26, 2021. REUTERS/Andrew Kelly

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June 28 (Reuters) – Walgreens Boots Alliance (WBA.O) on Tuesday scrapped plans to sell its British pharmacy chain, Boots, saying no third party was able to make an adequate offer due to turmoil on global financial markets. .

Walgreens’ decision to call off the sale comes as private equity bidders Apollo and TDR faced headwinds to raise funds for the deal, multiple sources told Reuters, as banks were reluctant to underwrite much of the financing due to difficult market conditions.

The boots were initially valued at £8 billion, according to banking sources.

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Global economic uncertainty and rising inflation triggered a spike in interest rates as central banks rushed to take action in the most widespread monetary policy tightening in more than two decades , making financing for transactions more expensive and harder to access. Read more

In Britain, the £7 billion takeover of supermarket chain Morrisons by US buyout fund CD&R is the most notable debt financing deal to have run into trouble, as its plan to raise £6 $.6 billion in debt to fund the deal has been delayed.

Walgreens had put its Boots business up for sale after announcing a strategic review in January as the second-largest U.S. drugstore chain renewed its focus on domestic healthcare.

The company said the decision to retain Boots and No7 Beauty Company was also underpinned by their continued strong performance.

“This is an exciting time for these companies, which are in a unique position to continue to seize future opportunities presented by the growing health and beauty market,” said Rosalind Brewer, CEO of Walgreens.

The 173-year-old Boots business has 2,200 stores in the UK, including pharmacies, health and beauty stores.

Shares of Walgreen fell nearly 3% to $41 before the bell.

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Reporting by Mrinalika Roy and Ankur Banerjee in Bengaluru, Pamela Barbaglia in London; Editing by Vinay Dwivedi

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