Deals

Boots and Sainsbury go on the offensive

UK private equity targets Alliance Boots and Sainsbury’s were in defiant mood as they reported their latest trading results, as they try to ignore the growing speculation about possible bids.

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Alliance Boots and Sainsbury’s, two UK retail chains at the centre of private equity bid speculation, were in defiant mood today as they reported strong trading results.

Sainsbury’s

Sainsbury’s chief executive Justin King announced a ninth consecutive quarter of growth, while Boots announced plans for the “biggest single expansion” of the Boots brand in its history, with a £65 million ($128 billion, €96 billion) shake-up.  

Like-for-like sales in Sainsbury’s for the 12 weeks to March 24 rose by 4.9 per cent, and by 5.9 per cent excluding fuel, boosted by additional Valentine’s Day revenue.

The supermarket chain’s annual like-for-like sales need to average 3.5 per cent to hit the company’s post-turnaround revenue target of £2.5 billion ($5 billion,  €3.7 billion). King said there was “still a bit of work to do” to get to the target, but believes the company is “still ahead of the curve”.

A Boots pharmacy

Alliance Boots chief executive Richard Baker also claimed strong results, reporting that the company saw like-for-like sales increase 2.3 per cent in the fourth quarter.

He also revealed plans to re-brand 800 community pharmacies, owned by Alliance UniChem before last summer’s merger with Boots, as “your local Boots pharmacy”.

However, both parties refused to comment on the ongoing private equity bid speculation.

The CVC-led consortium stalking Sainsbury’s is reportedly close to submitting its own offer, while rival Asda is said to be in talks with the Office of Fair Trading about launching its own bid.

Meanwhile there are growing rumours that Kohlberg Kravis Roberts could increase its £10-a-share bid for Boots, while Apax Partners and Terra Firma are also reportedly interested in the chain.