Asda owners Issa brothers eyeing £10bn Boots takeover

Supermarket giant Asda is considering a takeover of high street stalwart Boots in £10 billion deal from its US-based owner Walgreens, stated reports on Sunday (16).

Asda owners Blackburn-based brothers Mohsin and Zuber Issa have been on an acquisition spree, buying up more than 6,000 petrol station forecourts around the globe as well as the supermarket giant 15 months ago.

If the deal happens, the Nottingham-based chemist chain will provide Asda, which mainly operates large supermarkets and hypermarkets, with an extensive network of more than 2,000 pharmacies in cities and towns across Britain, reports said.

Estimated valuations circulating vary significantly and range from £5 bn to £10 bn. 

It is possible that Walgreens may yet decide against going ahead with a sale or could choose to spin the chain off as a separately listed company on the stock market.

Grocery industry sources said other supermarket groups too have shown an interest. The Boots chain would offer a wider store network that could be used to provide drop-off points for online businesses in local high streets. 

Other large private equity firms expected to consider a buyout of Boots include Apollo Global Management and Majestic Wine’s majority owner Fortress Investment Group. Apollo and Fortress both missed out on the buyout of Morrisons supermarkets last year.

However, critics say that many of Boots’ network of stores are long overdue a makeover which is likely to prove to be a headache for any buyer. 

The Issa brothers have already triggered an overhaul of Asda by inviting retailers including bakery chain Greggs and sports shop Decathlon to open outlets inside their supermarkets. The brothers’ own takeaway chain Leon, which they bought last year, also operates inside some Asda stores.

The brothers are planning to open more convenience stores at sites operated by their petrol forecourt business EG Group. They have also promised to invest £1 bn to improve the Asda business over a three-year period.