Ever since the Italian billionaire Stefano Pessina took over Boots, there have been worries about the future of the well-loved chain, which comes second only to Marks & Spencer in the affections of Britain’s shoppers.

The 80-year-old tycoon has hired Goldman Sachs to look at a sale of the High Street chemist almost 15 years after he took the business off the stock market in a £10billion deal.

At that time, it was the UK’s biggest ever debt-driven buyout, backed by US private equity firm KKR.

Italian billionaire Stefano Pessina with his 36 year-old partner Ornella Bara control Boots’ parent firm Walgreens Boots Alliance.

Boots’ beauty and pharmacy stores have since become part of Walgreens Boots Alliance (WBA), a £30billion international business, following a £16billion deal in 2014.

WBA has been listed on the US Stock Market, but it remains under Pessina’s control. He and Ornella Barra (his partner for 36 years) still hold firm to their grip.

A sale of Boots – founded by John Boot in 1849, but transformed by his son, Jesse, the 1st Baron Trent – is not yet a certainty.

Pushing Boots: Jesse Boot, who transformed the firm

Jesse Boot transformed the company by pushing boots

It could either be put on the UK stock exchange as an unincorporated business or kept going as part WBA.

If it goes up for auction however, the private equity firms are certain to be one of the potential bidders. In fact, they will likely be looking now to determine if Boots is available at a reasonable price. 

Private equity would increase the scandal over pandemic predators by a lot.

Buyout barons have targeted household names such as Morrisons supermarket chain, and LV mutual savings firm in a frenzy unlike anything seen since 2007 when Boots fell to private equity.

This rampage came to an abrupt halt due to the financial crisis. However, it has been rekindled during Covid-19. 

Boots, a devout Methodist family that founded Boots in Nottingham’s home town, would have hated any private equity deal.

Analysts have suggested Boots could be valued at as much as £10billion. But potential buyers might be more interested in Boots at a lower price.

An attempted takeover is likely to prove even more acrimonious than the rows to date, not only because of its status as a High Street stalwart but also because of its extensive network of pharmacies and their importance to the nation’s health. 

Boots also performed more than 3.7 million Covid tests during the pandemic.

By the 1920s the Boots  name was everywhere. the physical stores have not recovered to pre-pandemic levels.

By the 1920s the Boots  name was everywhere. The physical stores are not back to their pre-pandemic level.

Investment manager Justin Urquhart Stewart said: ‘Boots has lost its style and presence on the High Street and could end up yet another British brand consigned to history.

‘But the Government might want to look at economic security in the pandemic, as its branches could be a key element in testing and vaccinations for new Covid variants. 

Rather than private equity I would like to see a UK stock market float, where customers could buy shares.’ 

Under its Old Etonian boss Sebastian James, the company has been trying to make the main three strands of the business – beauty, pharmacy and wellbeing – work better together. 

Digital healthcare has seen a lot of attention, with online doctors available for patients who are unable to visit a GP. 

James, 55 years old, is the former Dixons Carphone chief executive. However, some store renovations have been slow at certain locations, and many shops still look scruffy and worn-out.

Pessina is often depicted in cartoons as an asset stripper who now lives in Monaco.

Reality is very different. He and Barra – who occupies a very senior position in WBA, where she is chief operating officer of the international business, including Boots – are empire builders.

Boots’ takeover was not a normal private equity deal. It was a case where KKR was used to help him create a multi-national company.

Despite this, Boots did not live up to the promise it made during the Pessina Years.

It was hoped that the No7 brand, its most popular product in America, would be as successful.

However, potions and serums, which have become a cult product in Britain, where they are the top-selling skincare brands, do not seem to be as popular overseas.

Boots made a small profit of £131million in the year to August 2020, having been hit by Covid-19. The virus cannot be blamed for the problems.

It had already been battling against online competition, heavy business rates and big corporation tax bills – a familiar cocktail of High Street woes. 

Private equity ownership could almost certainly add more jobs to the 6,500 lost jobs.

Previous private equity deals involving retailers have been handled by politicians without any intervention.

They may be uneasy about the possibility of Boots getting involved in a debt-laden takeover in an already troubled world. Fretting about the fate of No 7 anti-wrinkle creams or whether the popular ‘three-for-two’ offers would still be available under private equity is one thing.

It is not uncommon to worry about whether or not people will receive their medication.

Delivery without plastic for Christmas

Boots may be about to go up for sale – but at least it is celebrating a green Christmas, with online deliveries that are free of plastic packaging.

Although the company set a goal to eliminate plastic packaging from its delivery packages by the end the year, they were able to achieve this milestone a month earlier.

Boots.com now packs all of its merchandise in recyclable cardboard boxes and envelopes that have been certified by the Forest Stewardship Council.

To print Boots logos on parcels, the company even uses eco-friendly ink that is made of natural dyes. 

It is an important milestone to have plastic-free deliveries. Three years ago, over 60% of Boots.com’s orders had been packed in plastic.

To secure parcels it switched to paper-based tape, which saved 6m yards per year of plastic tape.

This year, it has used 12.8m of plastic bubble wrap bags to save fragile items. Instead, special paper was substituted with pockets of air and replaced by special paper.

The tiny remainder – 0.02% – of orders on Boots.com that are not packed in card are delivered in bioplastic, a compostable starch-based material that is sustainably created. 

Online orders made on the firm’s website are processed at an ecommerce facility in Burton upon Trent.

High-tech packaging technology reduces the need for cardboard by cutting it to the right size. This helps cut down on the number of cars that have to drive around Britain.

‘We’ve all had the experience of products being delivered in a box the size of a coffin,’ says Alan Penhale, Boots’s supply chain director.

 

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