High-street chemist Boots could be the target of a takeover bid from entrepreneur brothers Mohsin and Zuber Issa, who bought the supermarket group Asda 15 months ago.
A potential offer for Boots, which employs 50,000 staff and is said to be worth between £5bn and £10bn, is understood to have been discussed at a senior level, the Sunday Times and Mail on Sunday reported.
The discussions are believed to be at an early stage, it added.
There is also speculation that buyout giants Bain Capital and CVC Capital are also preparing a joint bid for Boots.
READ: Bain Capital and CVC to make joint bid for Boots - reports
Boots has been put up for sale by US owner Walgreens Boots Alliance Inc (NASDAQ:WBA) as part of its move to focus on US healthcare. It may also decide to spin off Boots into a separately listed company.
The chemist chain, which has 50,000 employees, would provide Asda with an extensive network of more than 2,000 pharmacies across Britain.
Boots’ wide store network could be used to provide drop-off points for online sales in local high streets, though the UK division made a pre-tax loss of £287mln in 2020.
Other supermarket groups have also shown an interest in Boots, the Mail said.
One senior supermarket source told the newspaper: “It's in play and everybody will be looking at it.”
Any bid from a supermarket giant would most likely have to be approved by the Competition and Markets Authority.
“Like Boots, supermarkets have big health and beauty ranges so the CMA would take a look,” said one senior supermarket source.
The acquisition of Asda by the Issa brothers in 2020 and the takeover of Morrisons by US private equity giant Clayton, Dubilier & Rice last autumn have led to speculation that other megadeals in the retail sector could follow.
Other large private equity firms believed to be considering a buyout of Boots include Apollo Global Management (NYSE:APO) and Majestic Wine's majority owner Fortress Investment Group. Apollo and Fortress both missed out on Morrisons, and Apollo also failed in its attempt to buy Asda.