Nelson Advisors interviewed by Healthcare Business International 'Sigma Healthcare drops out of talks to acquire Boots'
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Nelson Advisors partner Lloyd Price has been interviewed by Healthcare Business International for their 'Sigma Healthcare drops out of talks to acquire Boots' story focused on the strategic M&A and IPO options available to Boots and their PE owners Sycamore Partners.
When the private equity firm acquired Boots from Walgreens, rival bidders were put off bythe regulatory, financial and legal complexity it entailed, Lloyd Price, partner at M&A advisory firm Nelson Advisors, told HBI.
He further noted that the carve-out has gone better than expected. Boots has become“nimbler and faster” without Walgreens, with profits up 20–30%, and the hard regulatory,financial and legal work of the carve-out is now behind it. That de-risks the asset andexplains why rivals that “didn’t want to do the carve-out” are circling now.
“If the deal is on the table now, it’s just ahead of schedule. They (Sycamore) might havethought two or three years, but if they can get the 2–3x return they had in mind, they won’twait — they’ll take the money. That’s their job: to generate returns,” said Price
What’s likely to drive premium valuation for Boots is its ‘bricks and clicks’ model: adominant high-street footprint plus a sizeable online channel. Additionally, Price noted thatBoots is no longer a simple pharmacy retailer but a wellness-led platform, leaning intowomen’s health, menopause, femtech, gut health and GLP‑1 weight loss, which expandsits addressable market.
“These are high‑growth markets, and Boots seems perfectly positioned to capture a lot ofthis growth,” said Price.
If a trade sale falls through, another expected exit route is a listing in London. Accordingto Price, an IPO in London is credible.
“Outside of Tesco Clubcard, Boots Advantage Card is probably the biggest retail datasource out there. The ability to mine that data, feed algorithms and build a data and AIstory would be a major strength in any IPO,” said Price. However, he noted that publicmarkets are currently favouring tech assets. Additionally, a listing would invite greaterscrutiny of its debt.
“If it’s listed, Boots comes under quarterly results, full P&L (profit & loss) scrutiny,everything public, it’s just a lot more pressure. You have to ask whether private equityreally wants that level of corporate governance right now, or whether they’d rather buildBoots into a stronger position first,” said Price.
“An IPO is possible, but I don’t think it’s a short‑term play. In the near term, it wouldprobably be a trade sale, either to another private equity fund or a strategic, like a largeretail or pharmacy group,” he added.