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- 10 Jun 2022
- ICICIdirect Research
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RIL-APOLLO GLOBAL MANAGEMENT LEADS RACE FOR BOOTS BUYOUT
RELIANCE - 1205 Change: -25.15 (-2.04 %)News: As per media reports, Reliance Industries and Apollo Global Management have made a binding bid for UK chemist chain ‘Boots’. The offer values the company at between £5-6 billion ($6.3 -7.5billion). The company runs a network of more than 2200 stores across the UK, as well as private-label brands like No7 Beauty Co. It generates ~45% of the revenues from prescriptions and vaccinations (annual revenue: $ 7.5 billion)
Views: If the bidding is successful this would be Reliance Retail’s largest acquisition after an attempt to acquire Future Group. The company has been on an acquisition spree with media reports suggesting capex more than tripling to ~ |26000 crore in FY22 (had completed fund raise worth | 47625 crore). Reliance would probably seek to expand Boots’s business in Asia if they took control of the company and substantially expand RIL’s presence in the healthcare sector (previously acquired 60% stake in Netmeds for | 620 crore). Indian pharmacy players, in listed space are led by Apollo Pharmacy (4000+ outlets) and MedPlus (2000+ outlets) with major focus on tech enabled Omni channel offerings. Reliance acquisition of boots, along with already present Netmeds has synergies to possibly foray into Indian pharmacy space, which is expected to grow at 9% CAGR over next five years
Impact: Positive