The Canadian branch of the Weston family has agreed to buy Boots in an $8.9bn deal that marks its second change of ownership in little more than a year and ends Stefano Pessina’s 20-year association with the UK health and beauty retailer.
The Westons, who own the grocery chain Loblaws and pharmacy retailer Shoppers Drug Mart, said on Wednesday that they had entered into a definitive agreement to buy Boots from private equity firm Sycamore Partners.
Wittington, the Westons’ investment vehicle, is partnering with Toronto-based Fairfax Financial Holdings on the deal. Fairfax, which has investments in the retail sector, will own 50 per cent with the Westons having operational control of Boots.
“We see a meaningful opportunity to make a great business even better through stable long-term ownership, further capital investment, and the renewed operating focus required to serve customers with excellence for generations to come,” said Wittington chair Galen Weston Jr, who will become chair of Boots.
Sycamore acquired Boots last year as part of its $23.7bn purchase of parent company Walgreens Boots Alliance, in partnership with Pessina and his family.
Following the takeover, Sycamore split the group into five standalone companies, one of which was Boots. Pessina and his family hold a 44 per cent stake in each.
With his partner Ornella Barra, Pessina has been closely involved with Boots since the pair merged it with their European pharmaceuticals business Alliance UniChem in 2006. Pessina then teamed up with private equity firm KKR to take Boots private the following year before eventually reversing the UK chain into Walgreens.
“We are delighted to be passing on a thriving Boots to strong and reliable owners who understand the value of its great heritage,” Pessina said in a statement.
Sycamore and Pessina will retain ownership of Boots’ interests in Mexico’s Farmacias Benavides and Germany’s Alliance Healthcare Deutschland, with the deal expected to close in the first quarter of next year.
The deal marks a return to UK retail for the Westons almost five years after they sold luxury department store Selfridges for £4bn to a Thai conglomerate. The British branch of the family controls fast-fashion chain Primark and owns upmarket department store Fortnum & Mason.
Performance at Boots has improved in recent years, partly driven by investments in its beauty halls in some stores — one of the more durable corners of consumer spending — although many of its 1,800 stores have still received little investment.
The sale of the chain ends the prospect of Sycamore floating Boots on the London stock market, an IPO that would have provided a badly needed boost to the struggling market.
Nottingham-based Boots recently appointed former Currys boss Alex Baldock as chief executive.
CIBC and Morgan Stanley were lead financial advisers to Wittington while Skadden provided legal advice. A&O Shearman provided legal advice to Fairfax.
UBS and Rothschild were lead financial advisers to Boots, with Davis Polk acting as legal adviser to the group.