Reliance Industries in talks to raise up to $8 billion for Boots deal


Bombay : Reliance Industries Ltd (RIL) is in talks with a group of global banks to raise $8 billion for its proposed leveraged buyout of UK pharmaceutical chain Boots, two people with knowledge of the talks have said.

The conglomerate, led by billionaire Mukesh Ambani, is in talks with a consortium of foreign lenders including Barclays Bank Plc, Deutsche Bank AG, HSBC and Standard Chartered Bank for its biggest cross-border acquisition plan, the people quoted above said. above on condition of anonymity.

On June 9, Mint announced that a consortium of RIL and buyout firm Apollo Global Management Inc. had emerged as one of the leading candidates to acquire the Boots pharmacies unit of Walgreens Boots Alliance Inc. in the UK. United, with an offer valuing the latter’s assets at $7. 8 billion.

“The Walgreens Boots Alliance Board of Directors is expected to meet in the coming days with an agenda to discuss the potential agreement with the RIL-Apollo Global consortium. Then the RIL board will meet to approve the proposed takeover,” said one of the two people.

Following the acquisition, Reliance plans to integrate the assets of Boots into Reliance Retail Ltd and consolidate the combined entity under Reliance Retail Ventures Ltd (RRVL).

“As RRVL and Walgreens Boots have stable cash flow, as well as a large franchise across Europe, several global banks have stepped in for financing,” the second person said, adding that Reliance may later refinance the ready.

A spokesperson for RIL declined to comment on the story, while emailed questions to Walgreens, Barclays, Deutsche Bank, Standard Chartered and HSBC went unanswered at press time.

According to the people quoted above, the RIL-Apollo offer is significantly higher than competing offers, which are in the range of $5-6 billion. Walgreens put its Boots business on the block in December, seeking an $8.8 billion valuation. The US pharmacy chain also operates over 2,200 Boots health and beauty stores across the UK, with an estimated 85% of the population within 10 minutes of a Boots store.

In the third quarter of fiscal 2021, RRVL raised 47,265 crore by selling a 10.09% stake. It recorded a consolidated turnover of 1.99 trillion for FY22, an increase of 26.7% over the prior year, while net profit increased 28.7% to 7,055 crores. The company reported its highest ever Ebitda at more than 12,000 crore.

Analysts say the acquisition of Boots will expand RIL’s operations in Europe, give it economies of scale and open a lucrative business gateway to MENA (Middle East and North Africa) markets.

The deal will also significantly expand RIL’s presence in healthcare if completed. In 2020, the company acquired a 60% stake in Chennai-based online pharmacy startup Netmeds to 620 crore.

RIL has also made a series of acquisitions in the healthcare and pharmaceutical sectors. These include the purchase of majority stakes in digital health platform Karexpert and pharmaceutical software company C-Square. Additionally, RIL integrates its physical network to offer a bouquet of services that can be monetized through transaction-based, delivery, and subscription-based services.

According to reports, the British billionaire brothers Mohsin and Zuber Issa, co-founders of Euro Garages (owner of a chain of petrol stations) and the majority shareholders of the supermarket group Asda (owned through a consortium with TDR Capital ) were also competing for the deal, but have since pulled out of the race.

Over the past year, RIL has embarked on a wave of acquisitions to strengthen its presence in all sectors and markets. Last year, it narrowly lost to a consortium of private equity investors Apax Partners LLC and Warburg Pincus LLC for a majority stake in T-Mobile Netherlands BV, the country’s largest telecoms operator. The buyout companies acquired the Dutch telecommunications company for 5.1 billion euros ($6 billion) from Deutsche Telekom AG.

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