Market Loop - 👢Booted off?

HEALTHCARE
Boots owner ponders sale

What’s going on?
Walgreens Boots Alliance, the owner of Boots, is lining up advisors to prepare for a potential £12bn sale of the UK’s largest pharmacy chain.

Why is this important?

American health group Walgreens has owned 172-year old Boots since 2014 and is reportedly considering either selling the chain or listing it on the stock market next year.

With a footprint of 2,200 stores and 55,000 staff, Boots is one of the biggest high street chains in the country and one of the biggest private sector employers.

Rumours have been circulating since October that Walgreens could be eyeing a sale of Boots after the group announced a new strategic focus in North America.

Walgreens has already sold its European distribution arm, Alliance Healthcare, in June for $6.5bn. 

Valuation estimates for what Boots could go for vary from £5bn to £12bn. Consumer behaviour has accelerated towards online shopping during the pandemic and owning a business with such a vast store portfolio could put a dampener on the value. 

Takeaway
The sale of Boots would be among the most major consumer retail deal for years. Given its close links to providing NHS services, a sale would also draw a lot of attention from the government and public.

TECH
US challenges takeover of $75bn British chip designer

The US government has become the latest country to try and stop the takeover of British tech company Arm by US chipmaker Nvidia.

The US Federal Trade Commission is suing to block the deal in what would be largest of its kind in history.

The $75bn deal was announced back in September 2020 but has been heavily scrutinised by the authorities in the US, UK, EU, Australia and China. 

In August the UK government considered preventing the deal on the grounds of national security.

Arm designs rather than manufactures chips -  the essential components in the “brain” of every electronic device in the world. Its designs are core to most of the world’s smartphones and it's growing its presence in computing competing with the likes of Intel.

The Cambridge-based company was bought by Japanese tech group Softbank for £24bn in 2016 making it the biggest ever UK tech deal.

The possible Nvidia deal has raised concerns from competition authorities worldwide and Arm customers like Google, Samsung and Microsoft. The fear is that a merger would allow Nvidia to limit chip supplies and increase prices.

This is all the more in focus as we are in the midst of a global chip shortage which is having huge impacts on the production of cars, phones and electronics. 

Despite the mounting opposition over the takeover Softbank has remained confident that it will eventually go through. But with the competition regulator of the world’s biggest economy against you – that is an optimistic view.