Sigma Healthcare abandons $10bn Boots takeover, sending shares up 8%
Sigma Healthcare has walked away from talks to acquire Boots in a deal that could have valued the UK chain at $10 billion, saying the transaction would not meet its strategic and capital objectives. Shares in the Australian pharmacy group jumped as much as 8% on the news.
Deal abandoned
Sigma Healthcare has pulled out of early-stage negotiations to buy Boots, the company confirmed on Monday, stating the potential acquisition did not align with its strategic and capital investment objectives. The Australian group, which owns the Chemist Warehouse retail chain and a wholesale pharmaceutical operation, had been in talks with Boots' owner, US private equity firm Sycamore Partners. Financial details were not disclosed, but the Financial Times reported a deal could have valued the 177-year-old UK chain at roughly $10 billion (€8.6 billion, £7 billion). Sigma said it would immediately cease discussions.
Market response
Investors appeared to welcome the decision. Sigma shares rose 8% on Monday, reversing some of last week's declines that followed reports of the takeover approach.
Investors appear to have breathed a sigh of relief. Today's 8% rally suggests shareholders would rather see management focus on executing the opportunities already in front of them than pursue another transformational deal of that scale.
Citi analyst Adrian Lemme noted that Sigma had gained useful insights from the exploratory exercise: how its shareholder base would react to a large cross-border deal, and deeper UK market intelligence as it rolls out its own joint venture.
Boots ownership saga
The withdrawal prolongs a period of uncertainty for Boots, which has been for sale in various forms since 2022. Sycamore Partners acquired Boots' parent, Walgreens Boots Alliance, last year in a $23.7 billion transaction, and has since explored options including a sale or stock market listing of the British business. Canada's Weston family, the dynasty controlling Primark owner Associated British Foods, has also held discussions about a possible deal, according to the FT. No agreement has emerged.
Sigma's strategic pivot
Sigma's decision comes just weeks after it entered the UK market through a joint venture with GreenLight Healthcare, a small London-focused chain. The company plans to rebrand some of those stores in the style of Chemist Warehouse, known for its discount pricing and dense shelf displays, in the coming months. Sigma said it would maintain its primary focus on the Australian market but continue to assess acquisition opportunities. The group completed a merger with Chemist Warehouse last year, creating a A$30 billion pharmacy and retail giant, and its shares have more than tripled since that deal was announced in December 2023.
