Fears are growing that the takeover of High Street chemist Boots by a US private equity firm will lead to job losses and shop closures.
Its parent company, Walgreens Boots Alliance (WBA), which is listed on the US stock market, is being taken over by buyout barons at Sycamore Partners in a deal worth nearly £18.4 billion.
Boots was bought by Italian billionaire Stefano Pessina in 2007, and since the merger with Walgreens in 2014 he has been WBA’s largest shareholder. The 83-year-old’s wife, Ornella Barra, 71, is a senior executive.
The 176-year-old firm employs 51,000 staff in Britain across its 1,800 pharmacies and opticians.
Any big job cuts at Boots would be a hammer blow to the retail sector. Bricks and mortar shops, which have struggled due to online competition, Covid and rising overheads, now face a big rise in employment costs due to Chancellor Rachel Reeves’ move to raise employers’ National Insurance contributions.
The Centre for Retail Research forecasts that across the sector there will be 17,350 store closures in 2025 and 202,000 job losses.
‘Confident’: Stefano Pessina and Ornella Barra bought Boots in 2007
Sources close to Boots say its network has become bloated, meaning it could be one of the first targets of a cost-cutting strategy under its new owners. The firm announced the closure of 300 shops in 2023.
Sycamore Partners, based in New York, describes itself as a retail and consumer specialist.
Its other investments include fast-fashion brand Hot Topic and it was previously the owner of footwear firm Kurt Geiger.
In an email to Boots staff seen by The Mail on Sunday, Barra said she believed Sycamore was ‘the right partner’ and that it was ‘supportive and confident’ in the business. She said Pessina would remain a significant shareholder and urged employees ‘to remain focused on your day-to-day’.
She added the company would continue its strategy of revamping its beauty business, expanding pharmacies into broader healthcare services such as tests and jabs, and improving online shopping and physical stores. She singled out the much-loved No7 brand for praise, raising hopes its popular serums will be safe under the new owners.
However, Sycamore’s record may give staff pause for thought.
Under its ownership, US firms such as department store chain Belk and fashion brand Nine West have filed for bankruptcy.
Matt Parr of the Private Equity Stakeholder Project, a US nonprofit organisation that monitors the sector, said the levels of debt were a ‘huge concern’, adding: ‘Walgreens already has $9 billion (£7 billion) in debt. Private equity tends to use high amounts of debt in these buyouts leading to high bankruptcy rates.’
Observers say Sycamore may seek to float Boots on the stock market or sell it on.
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