Sigma Healthcare (ASX: SIG) has confirmed it’s in preliminary talks to acquire U.K. pharmacy and health retail giant Boots, in what could become one of the largest offshore acquisitions ever undertaken by an Oz healthcare company.
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The Chemist Warehouse owner acknowledged media speculation surrounding the sale process for Boots, stating it regularly evaluates opportunities that could create shareholder value. Sigma cautioned, however, that discussions remain at an early stage and there is “no certainty a transaction will proceed.”
Investor reaction has been mixed, with Sigma shares falling sharply following reports that the company was among a number of parties exploring a deal for the U.K. retailer. Market concerns have focused on the scale of the proposed acquisition and the risks associated with a major international expansion.
Reports suggest Boots could command a valuation of around US$10 billion, equivalent to more than A$14B. The business operates approximately 1,800 stores across the United Kingdom and is one of Britain’s most recognised retail pharmacy brands, with a history stretching back more than 175 years.
Boots is currently owned by private equity group Sycamore, which acquired parent company Walgreens Boots Alliance last year. According to overseas reports, Sycamore has been exploring strategic alternatives, including a sale.
The acquisition would significantly expand Sigma’s international footprint following last year’s merger with Chemist Warehouse, which created one of Australia’s largest listed healthcare and retail groups.
Sigma has already taken steps into the U.K. market, acquiring a majority stake in healthcare services provider Greenlight Healthcare earlier this year.
Boots generated solid sales growth during its most recent financial year, supported by strength in beauty products and healthcare services, including vaccinations and weight-management treatments.
While analysts remain divided on the strategic merits of a deal, a successful acquisition would transform Sigma into a major international pharmacy retailer with operations spanning Australia, New Zealand, and the U.K.
Sigma said it would update the market should discussions progress to a stage requiring disclosure.
SIG last traded at $2.73/sh, down just over -1% today.
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