Reliance Industries, Apollo Global make binding offer to acquire Boots

After months of negotiations, Apollo Global Management and Mukesh Ambani-owned Reliance Industries have finally made a binding bid to acquire UK-based chemist and drusgtore chain Boots.

According to people in the know, Reliance has joined hands with Apollo and made a binding offer for Walgreens Boots Alliance Inc.’s international drugstore arm of £5-6 billion. A binding offer may help Reliance close the deal ahead of rival bidders, including Britain’s billionaire Issa brothers and TDR Capital.

The drugstore chain is currently owned by American retail giant Walgreens Boots Alliance and has a presence in the United Kingdom, Ireland, Italy, Norway, the Netherlands, Thailand, and Indonesia. Walgreens had put up the business for sale in December last year and had sought a valuation of about £7 billion for Boots.

The bid process has been continuing for several months amid multiple geopolitical issues, including the rising Covid-19 cases, inflation, the Russia-Ukraine war, and the volatile credit markets of the UK.

According to experts, Reliance has placed a bid for the huge retail network business of more than 2,200 stores across the UK, as well as private-label brands like No7 Beauty Co. and operations in multiple countries. 

However, when BusinessLine e-mailed Reliance, it said: “As a policy, we do not comment on media speculation and rumours. Our company evaluates various opportunities on an ongoing basis.” It further added that it has, and will continue to make necessary disclosures in compliance with its obligations under SEBI regulations.

Business diversification

The company is looking to diversify from its traditional oil-to-chemicals businesses. It has expanded in multiple sectors, including retail, telecom, and digital services among others, and has been on an acquisition spree over the last year. These include the acquisition of leading digital marketplace, Netmeds, furniture, and home decor retailer, Urban Ladder, and the lingerie and intimate wear brand, Zivame, along with a host of Indian fashion designer brands.

Arvind Singhal, Founder & Chairman of Technopak Advisors, does not see an immediate impact of the acquisition on Reliance’s retail presence in India. He said, “Boots aren’t present in India, so I see no big impact. They can launch in India, however, in my view, Reliance may have acquired it from a global presence point of view for its overall retail spectrum.”

‘Strategic move’

Satish Meena, an Independent analyst covering e-commerce, said it is a very strategic move by Reliance. He believes that this potential deal comes in line with its e-commerce and retail strategy. “There are four baskets Reliance is expanding in; fashion, grocery, digital services, and pharma. So, this acquisition makes a lot of sense.” 

Reliance has already acquired more than a dozen brands including some A-lister designer brands. It is consolidating its online and offline footprint with Jiomart. Not only that, it is also strengthening its b2b and b2c presence by aligning its logistics and supply chain.

On the digital services, too, according to its FY21 annual report, Reliance Jio acquired the right to use spectrum in all 22 circles across India which takes its total spectrum footprint to 1,732 MHz registering a significant jump of 56 per cent. Not only that, it has strategic initiatives along with Facebook, and Google for digital inclusion in India. It is also working with Microsoft to enhance the adoption of leading technologies.

“After investing big in fashion and grocery, this (pharmacy) is their next category. So, Reliance absolutely sees potential. It is a new category, and Reliance has the potential to increase the category size,” Meena added.