Saturday, Nov 26, 2022

How Gujarat-Born Issa Brothers Have Locked Horns With Mukesh Ambani For Boots

Reliance Industries has decided to foray into the UK’s retail sector by acquiring Boots—a popular pharmacy brand in the country

Mukesh Ambani. PTI

If there is one thing Mukesh Ambani is not guilty of, it is lassitude—he has always been bullish on expanding his business, taking it across India’s borders. This time around, Reliance Industries has decided to foray into the UK’s retail sector by acquiring Boots—a popular pharmacy brand in the country. However, this expectedly soft-shoe approach has hit a nail, as he faces tough competition from Issa Brothers, the owners of Asda, another popular retail chain. 

However, Ambani and Issa Brothers are not the only power players who are currently eyeing the deal. The global pharmaceutical market is rising at an unabated speed, with the Covid-19 pandemic only accelerating the growth. According to a report by IQVIA, the global medicine market is expected to grow at a 3 to 6 per cent CAGR reaching $1.6 billion by 2025. As developed countries like the USA and UK amongst others are estimated to grow by 2–5% until 2025, several other non-pharmaceutical companies are bidding to acquire a brand that is leading the pharmaceutical industry in the United Kingdom. 

Who are Issa Brothers

Mohsin and Zuber Issa are Gujarat-born British citizens, who own Asda and EG Group. Founded in 2001, Euro Garages or EG Group is one of the leading retailers across UK and Europe. The company is headquartered in Blackburn and has more than 5,200 petrol stations across the UK and Europe, as well as several food outlets including the food branches of American food eateries such as KFC, and Cooplands bakeries and Leon Restaurants. Issa Brothers first made headlines in 2020, with the acquisition of a majority stake of Asda, the UK’s third-largest retailer from Walmart worth 6.8 billion pounds. The other stakeholder is TDR Capital. With the acquisition of Asda, Issa Brothers became the first UK-based stakeholder of Asda in over 20 years. As of 2020, Issa Brothers has assets worth $3.6 billion. Notably, TDR Capital owns 50 per cent stake in EG Group, with both Mohsin and Zuber Issa, having 25 per cent stake each in the company. 

The Boots Sale

Boots, with 2,200 stores and over 50,000 employees is a subsidiary of US-based Walgreens Boots Alliance. Intending to focus on its domestic business, the Walgreen Boots had put Boots for sale in December last year. Reports say that the UK-based retailer, with a valuation of $7.5 billion, gets about 45 per cent of its estimated GBP 6 billion in annual revenues from providing healthcare services such as prescriptions and vaccinations to the country’s state-run National Health Service. With the acquisition of Boots, Ambani in partnership with USA-based Apollo Global Management is aiming to expand its presence in the UK, a market that has been Ambani’s current favorite with the previous acquisition of Hamleys in 2019, and battery technology firm Faradion in 2021.

However, Ambani is not the only one who sees the UK as a lucrative place of investment. As Issa Brothers contest Ambani in acquiring Boots, the duo are aiming to expand their footprint across UK and Europe. According to reports, the duo had announced earlier this year that they are aiming to create as many as 32,000 jobs by 2026 across UK and Europe. 

As for Boots, if the acquisition by Ambani-led Reliance Industries becomes successful, it will have an opportunity to expand its business not only in India but also across South-East Asia and the Middle East. 

Apart from Ambani and Issa Brothers, investment firm Advent, Carlyle, KKR, and retail private equity firm Sycamore Partners are also in line to win the bid.