Boots/Reliance: Ambani could reinvigorate UK chemist chain

Retailing in India is not for the faint-hearted. It is tough for locals and even harder for foreigners. But UK chemist chain Boots could have a chance to crack it under the aegis of Mukesh Ambani’s Reliance Industries.

India’s largest listed company by market value has teamed up with private equity giant Apollo to make a binding offer to US giant Walgreens Boots Alliance for the bulk of its UK business. The bid values the company at up to £6bn, according to reports on Thursday.

Boots struggled during the pandemic with store closures and lockdowns. That prompted WBA to float the idea of a sale at the end of last year, originally seeking a price of £7bn. But market tumult and the war in Ukraine made competing bids from Asda owner the Issa brothers and rival private equity groups less certain.

Boots’s appeal to Apollo is as a cash-generative business with strong defensive qualities. For Reliance, the draw is likely to lie in the scope to expand the brand in Asia.

Reliance was identified as the second fastest-growing retailer globally by Deloitte last year, with a compound annual growth rate of 49.4 per cent in the five years to 2020. It has already breathed new life into struggling UK toy chain Hamleys, which became Reliance’s first international retail brand in 2019. It is now rolling out a plan to quadruple the number of stores in India to 500.

Fierce competition is one reason foreign brands shy away from India. France’s Carrefour exited from its operations in 2014 while Germany’s Metro is now considering the sale of its cash and carry business. Restrictions on foreign ownership and investment also give local operators a big advantage.

Difficulties in Indian retailing are not confined to foreigners. Witness the spectacular collapse of India’s second-largest chain Future Retail over the past two years. That, though, provided further grist for the Ambani empire, which took control of the bulk of Future’s 1,500 stores.

Expect Boots to become a high street name in India as Reliance continues to diversify away from its hydrocarbon roots.