Boots plans ‘merger of equals’ deal with Alliance |
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Mon, 03 Oct 2005 16:05
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LONDON: Drugs retailer Boots Group today announced a £7bn ‘merger of equals’ deal with Alliance Unichem in a bid to revive its flagging business. The merger will save the combined entity approx. £100m annually and will also take the Boots brand name overseas more successfully than previous attempts by the retailer.
The combined business plan entails overhauling the chain of stores. There will now be 1,500 pharmacies located on secondary High Street locations and 800 larger stores which will primarily offer cosmetic products.
Teaming up will allow Boots a better chance to establish business abroad. Its earlier attempts in continental Europe, Asia and the US have all resulted in losses.
In contrast, Alliance Unichem already has a successful network in Italy, Netherlands, Norway and Switzerland. The merged entity plan to create an international health-care group with the name ‘Alliance Boots’ and will have 3,000 stores and a wholesale and distribution network that spans 11 European countries with 88,000 outlets.
According to the terms of the deal, Boots will hold 50.2 percent of the combined group and Alliance Unichem will hold 49.8 percent. Analysts estimate the combined sales at £13 billion annually.
For consumers, the merger is likely to result in lower prices for the entire range of typical pharmacy products including cosmetics. This would be possible after the logistics and the wholesale network are integrated and corporate costs minimised.
The merger would be finalized after Boots’ Boots Healthcare International – its OTC medicines business, is sold.
Boots had been hit by a string of profit warnings and had to revise its forecast for full-year sales. The company also runs Boots Opticians and Scholl footwear shops.
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