It appears to have led to the acquisition of UK-based pharmacy, health and beauty products retail chain Boots by Mukesh Ambani’s Reliance Industries and US-based Apollo Global Management, following a rival consortium led by the billionaire Issa brothers – who are part of the UK’s largest retail chain. The way has been cleared for the retailer’s owner. Asda – and TDR Group reportedly backed off differences over valuations.
Walgreens Boots Alliance, which operates US drugstore chain Walgreens & Boots in the UK and EU, was reportedly seeking $8.8 billion, while bidders estimated the chain’s value at around $6 billion.
Why Walgreens is shutting down Boots is easy to see. The US pharma chain needs cash as it attempts to pivot into the high-margin health and wellness sector. Brexit has also complicated matters for UK-based Boots, which has a strong presence in several other EU markets, as well as Thailand and Indonesia in Asia.
However, why Ambani is pitching for Boots is more difficult to see. So far, Reliance’s acquisitions have primarily focused on consolidating its existing businesses and bridging and plugging gaps in its home retail portfolio as it seeks to take on rivals Tata and Adani in the physical retail space, as well as Amazon. And Walmart-Flipkart is ready to tackle. in the e-commerce sector.
Consider its acquisitions over the past three years. It acquired North American shale oil and gas assets as well as a group of Faradion, Canoda and Lithium Works in the new energy sector. The retail business has acquired UK toy retailer Hamleys, local search provider Justdial, hyperlocal milk delivery business Milkbasket, Jivame, Kalaniketan and Portico and online furniture retailer Urban Ladder, Sri Kannan Departmental Store, Jayasuriya in the fashion space.
While Hamleys is an outlier, this ties in with Reliance’s plan to strengthen its retail network by adding technology providers to the location along with other smaller stores, which explains its purchase of Find, which is a smaller retailer. Helps sellers to be online. Its 25.8% stake in Dunzo will help it add to the delivery as well as help it gain a foothold in the emerging fast commerce space.
Reliance’s Netmeds also buys what appears to be a bid to ensure it is in fray with rival Tata Group, which has acquired online pharma retailer 1mg and health and wellness chain Curefit.
Buying shoes to promote domestic business does not fit into this pattern. It is a high street retailer with a chain of 2,200 stores, which is grappling with falling footfalls along with rising costs in traditional high street retail. While there are some synergies with Reliance’s domestic foray into online pharma retail, Boots will present other challenges for Reliance, not the least of which are cultural differences and operating an international consumer-facing business that combines energy and infrastructure. is out of your comfort zone. Even Walgreens, which grew into a pharmacy behemoth through mergers and acquisitions of chains that were themselves built through M&As, integrating the 173-year-old Boots—it made its debut in 1933. Thousandth store opened – was a tough challenge. How Reliance absorbs Boots will be a test of whether Reliance emerges as a true core sector-to-consumer conglomerate. Boots’ bid marks a new direction in Reliance’s acquisition spree. This will give a huge boost to the retail sector for RIL, but will also be a test of management skills and cultures.