Weston family's holding company to buy U.K. pharmacy chain Boots for $12.7B

U.K pharmacy chain Boots is one of Britain's most prominent retailers

The family behind Canada's biggest pharmacy and grocery chains is growing its empire with the acquisition of U.K. drugstore Boots.

The Weston family holding company Wittington Investments said Wednesday that it will purchase Boots for $8.9 billion US (almost $12.7 billion Cdn), including debt, from private equity firm Sycamore Partners.

Along with Boots's retail operations in the U.K. and Ireland, Wittington will acquire its operations in Thailand and franchised businesses, its optical division and No7 Beauty Company.

Toronto-based holding company Fairfax Financial Holdings Ltd. will partner with Wittington on the acquisition and after its closing, expected in the first quarter of 2027, Galen Weston will become Boots's chairman, with Wittington having operational control upon close.

Weston, who declined an interview Wednesday by The Canadian Press, said in a news release that he was drawn to Boots because it is "one of Britain's most enduring businesses, with a rich heritage, a trusted name and a vital role in everyday life across the U.K. and Ireland."

However, he hinted there is some room for improvement.

"We see a meaningful opportunity to make a great business even better through stable, long-term ownership, further capital investment and the renewed operating focus required to serve customers with excellence for generations to come," he said.

Boots is among Britain's most prominent retailers and has many similarities to Shoppers Drug Mart, the Canadian pharmacy giant with ties to the Westons.

A Shoppers Drug Mart pharmacy that is offering COVID-19 vaccines by appointment is shown in Bowmanville, Ontario on Wednesday January 12, 2022. (Doug Ives/The Canadian Press)

The Westons are best known in Canada for building Loblaw Companies Ltd. and George Weston Ltd., and owning luxury department store Holt Renfrew. Loblaw Cos. Ltd. bought Shoppers Drug Mart in 2014.

They also have a stake in Associated British Foods, the parent company of value retailer Primark and the makers of Twinings tea, Mazola oils, Mazzetti vinegars, Ovaltine and Fleischmann's yeast.

It's unclear whether the acquisition will bring Boots, which was founded in 1849 and operated for a time in Canada, back to the country. If Boots made a Canadian return, it could become a competitor with Shoppers, which counts about 1,350 stores in Canada.

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Boots has roughly 1,800 locations. When a Boots acquisition by the Westons was rumoured in late September, RBC Capital Markets analyst Irene Nattel said the deal made some sense.

"We believe there is substantial organizational knowledge and understanding of retail pharmacy within the Weston family of businesses and investments, knowledge that would prove extremely useful should a transaction come to fruition," she wrote in a Sept. 30 note to investors.

She didn't see a potential deal as having much impact on Loblaws or George Weston, if it was completed through the family's private investment arm Wittington.

As part of the deal announced Wednesday, Sycamore Partners, along with Stefano Pessina and his family, will retain ownership of The Boots Group's interests in Farmacias Benavides and Alliance Healthcare Deutschland.

"One year ago, we re-established Boots as a standalone company, allowing its management team and more than 50,000 colleagues to focus solely on their business and customers," said Sycamore's managing director Stefan Kaluzny in a news release.

"This transaction is a testament to the work they have done and the incredibly bright future ahead."

Tara Deschamps is a business reporter with The Canadian Press