Showing posts with label H&B. Show all posts
Showing posts with label H&B. Show all posts

Wednesday 28 October 2015

Walgreens Boots Alliance take Rite Aid - another global step..

Yesterday’s bid for Rite Aid will obviously impact the US market, but UK and EU NAMs need to place this move in a global context in order to anticipate the impact at local level.

For those that need reminding, in a few short years, Stefano Pessina transformed a small family business into Alliance Boots, a European drug retailing and wholesaling powerhouse, through a series of takeovers. In 2007, he took the company private in an $18.5bn leveraged buyout with KKR & Co. At year-end, KKR still owned about 4.6% of Walgreens stock.. And this successful integration and revitalisation of an iconic UK brand, without missing a beat (in contrast with Kraft's acquisition of Cadbury...).

WBA-Rite Aid will result in a company with annual sales of £65bn and a Mkt Cap = £68bn.
Compare this with Tesco annual sales £69.7bn and £15bn Market Cap…
(apart from the additional scale of WBA, this Sales/Mkt Cap comparison indicates the degree of Tesco's fall from grace, and the need for H&B suppliers to re-balance their customer portfolios...)

Given that the WBA merger has been one of the private-equity firm’s best-ever deals, making it well over four times KKR’s initial investment, the private equity group will want to stay at the table...
In other words, KKR are unlikely to miss out on funding further deals proposed by Mr Pessina…  

In defending the bid, Walgreens and Rite Aid would be likely to argue to regulators that they compete not just with other traditional drugstore chains, but also with companies such as groceries and club stores.

Finally, according to the WSJ, Mr. Pessina hasn’t been shy about his desire to do big deals. “We can clearly see the need or the opportunity for horizontal and vertical consolidation in our industry”

Joining some of the obvious dots, we should assume that SP is still working to a global agenda, growing by acquisition, targeting anything in healthcare and beauty, but also competing with grocers and warehouse clubs, anywhere…with appropriate funding on tap via KKR and the stockmarket…

Watch this space…

NAM Implications:
  • Scale? At $100bn sales, almost as big as Tesco global...!
  • Synergies? $1bn savings in year one is just the start ...
  • Negotiation? First agenda item has to be prices & terms disparities.
  • Preventive action? Suppliers have six months to remove anomalies, while WBA are distracted by the inevitable government scrutiny.
  • Amplify? Worth sharing with global colleagues for a co-ordinated approach?


Thursday 18 September 2014

Primark introduce budget Nail & Brow bars into stores


According to Retail Gazette, Primark are teaming with recently launched nail and brow studio Love Beauty, and aim to provide accessible expertise at 50% off high street prices.

A Love Beauty brow and nail bar was launched in Primark Manchester on 15th September and will roll-out to Primark Liverpool on 22nd September, followed by Dublin on the 29th and then nationwide.

Primark’s expansion has been burgeoning in recent years, what with concessions now running through Selfridges, stock selling through ASOS and plans to enter the US market next year

Time to check out what Primark have done to the clothing category, and factor Primark Love Beauty into your mix?