Walgreens Boots Alliance is set to hand over £1bn to offload Boots’ pension scheme ahead of a new sale bid for the UK retailer.
Boots’ parent company is allegedly paying a hefty sum to relinquish its responsibility for the health and beauty retailer’s £4.5bn defined pension scheme, according to a report by The Times.
It is rumoured to be closing in on a pension risk transfer deal with Legal & General and would reportedly need to pay the financial services company £1bn to accept the scheme.
The move is alleged to be a precursor to the American company reinitiating a new sale of Boots after its abandoned process last year.
A pension buyout would dissolve the guarantee Walgreens provided to the scheme, which had been a deterrent to private equity firms previously eyeing up the UK retailer.
Walgreens Boots Alliance first put Boots up for sale in January 2022 with a price tag of £7bn.
However, the sale was called off in June 2022 after failing to find a suitable buyer, with offers believed to be closer to £5.5bn.
The company cited “unexpected and dramatic” changes in market conditions as key reasons.
It is rumoured that Walgreens Boots Alliance’s investors and board members want the company to refocus its efforts on its US domestic market.
Walgreen Boots Alliance was formed in 2014 and owns American beauty and health care chain Duane Reade, as well as Walgreens.
It has been a year of change for Boots as Walgreens Boots Alliance has made operational changes to "consolidate" the UK high street business.
Boots announced it was closing 300 stores as part of this "transformation plan", shutting shops in close proximity to each other.
At the same time, Boots has continued to grow its market share in premium beauty.
The company launched a professional hair care category online to strengthen its offering and is opening its first-ever beauty-only store next month.
The store at London shopping destination Battersea Power Station will be a space for customers to try out the “latest products and trends”.
Boots is working to rejuvenate more than 170 of its beauty halls across the UK and Ireland too.
The most recent updates have been at the St Albans, Kilbride, Grantham and Stratford-upon-Avon branches.
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