RIL to submit bid for British medical retail chain Boots by month-end

In final bids for Boots, billionaires, and owner of UK's retail ASDA Group, Issa Brothers, are in the race with TDR Capital, a British private equity firm, and will be the front-runners.

Mukesh Ambani-owned Reliance Industries (RIL) plans to submit a bid, along with Apollo Capital, for British medical retail chain Boots UK by the end of this month, according to people in the know. 

The transaction, which would be RIL’s first big-ticket overseas investment after a string of acquisitions in the American shale gas industry, may cost as much as $10 billion.

The deadline for submitting the bid was on Monday but it was extended following a request from the bidders, said a banker. UK-based billionaires, Issa Brothers, who own British supermarket chain Asda are in the race along with private equity firm TDR Capital, and are considered the front-runners, according to the bankers.

“This transaction will require a lot of political capital in the British government and the Issa brothers have a lot of clout,” said a banker.  “But Ambani and Apollo are also planning an aggressive bid,” a banker said.

The Issa brothers  – Mohsin and Zubair – acquired Asda from Walmart for 6.8 billion pounds in October 2020 and are known for creating a retail empire via acquisitions.

A Reliance spokesperson declined to comment.

Bankers said RIL’s overseas subsidiary had tied up with American private equity giant Apollo Global Management to fund the transaction and was in talks to raise funds from overseas banks. If Ambani wins the race, then it would give him a formidable presence in the European retail market with access to 2,200 stores. RIL had acquired online drug seller NetMeds in India and the Boots acquisition will help it launch NetMeds abroad and bring the offline retail chain to India.

The drugstore chain is currently owned by American retail giant Walgreens Boots Alliance and has a presence in the United Kingdom, Ireland, Italy, Norway, the Netherlands, Thailand and Indonesia.

Analysts said RIL has ample cash reserves to mount an aggressive bid with cash and liquid investments of Rs 2.4 trillion as on December 31, 2021, at a consolidated level.

RIL’s financial flexibility was further supported by sizable bank lines, which usually remain unutilised to the extent of 30-50 per cent, according to rating agency CRISIL.