Walgreens to offload Boots pension ahead of new sale process
Walgreens is set to pay £1 billion to offload Boots' pension scheme as it prepares to relaunch the British retailer's sale process.
Walgreens Boots Alliance is said to be closing in on a deal to hand over responsibility for its £4.5 billion defined benefit pension scheme to financial services company Legal & General, according to The Times.
It is understood that Walgreens would need to pay Legal & General £1 billion to accept the scheme.
A pension buyout would dissolve the guarantee Walgreens provided to the scheme, which has previously deterred private equity firms from buying the health and beauty retailer.
The move is reported to be a precursor to the American company restarting the sale of Boots after abandoning the process last year.
Walgreens Boots Alliance, also known as WBA, was formed through the combination of Walgreens and Alliance Boots in 2014.
The transaction brought together two retail giants with "iconic brands, complementary geographic footprints, shared values and a heritage of trusted healthcare services through pharmaceutical wholesaling and community pharmacy care, dating back more than 100 years".
However, Boots was put up for sale with a price tag of £7 billion in January 2022. This was called off in June 2022 after failure to find a suitable buyer.
Last month, Walgreens Boots Alliance reported a 9.2% increase in sales in the fourth quarter. Despite this, the company's total adjusted operating income dropped 9.8%. It also reported a net loss of £146 million ($180 million).
Sales at Boots grew 10.9%, with comparable pharmacy sales up 9.9% and comparable retail sales up 11.7% - reflecting growth across all categories.
Online sales at Boots also continued to perform "strongly", growing 28.9% and representing over 13% of the retailer's total sales.