Private equity suitors circle £400m LloydsPharmacy chain as US owner cuts ties

A trio of financial investors are circling one of Britain’s biggest chains of chemists as its American owner finalises its retreat from an expensive foray into Europe.

Sky News has learnt that Aurelius Group, Epiris and HIG Europe are expected to table formal bids this week for LloydsPharmacy, which employs well over 15,000 people.

The offers follow months of talks between LloydsPharmacy’s owner, McKesson Corporation, and prospective bidders.

Last month, Bloomberg News reported that McKesson was in discussions to sell its operations in continental Europe to a German pharmaceutical wholesaler called Phoenix Group.

That deal would not, however, encompass the New York-listed company’s British business, which also includes All About Health, the UK’s biggest drug distributor.

Aurelius, Epiris and HIG each have track records at buying underperforming assets and attempting to revive them.

A formal agreement with one of the bidders is not likely for several weeks, according to people close to the process.

Bankers at Barclays are advising McKesson on the sale process.

The auction comes after LloydsPharmacy’s boss faced questions from a prominent MP about its treatment of its workforce.

In February, Robert Halfon, a member of the Conservatives’ 1922 Committee, wrote to Toby Anderson, chief executive of McKesson UK, querying prospective changes to staff overtime and sick pay rates.

Toby Anderson
Toby Anderson

McKesson UK had been proposing to slash overtime and sick pay, move its workforce to a six-day working week including Saturdays, slash bonuses and remove a heavily subsidised private healthcare scheme.

The company has told branch managers that its policy is “not to speak to the press”.

By some measures, McKesson is the biggest competitor in the UK to Boots the Chemist and its parent company, Walgreens Boots Alliance.

LloydsPharmacy operates a network of more than 1,400 sites across the UK, employing more than 17,000 people.

Hundreds of its outlets are based in GP surgeries.

The LloydsPharmacy estate was assembled over decades through the absorption of prominent industry names such as Savory & Moore, Cross & Herbert, Kingswood GK and Hills Pharmacy.

In 2016, the company bought Sainsbury’s network of nearly 300 in-store chemists.

LloydsPharmacy became part of McKesson in 2014, when the American group bought Celesio in a £5bn deal.

McKesson also owns John Bell & Croyden, a royal warrant-holding pharmacy in London’s Mayfair which has been enlisted as part of the government’s COVID-19 vaccination programme.

John Bell & Croyden opened in 1798 and claims to have been Her Majesty The Queen’s pharmacist since 1958.

In accounts filed at Companies House for the year to 31 March 2019 loss-making LloydsPharmacy described it as “another exceptionally challenging year”.

None of the bidders would comment on Monday.

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