Billionaires: Ambani’s Reliance explores bid for Boots pharmacy chain

In our fortnightly round-up, oil tycoon George Kaiser’s well-timed IPO boosts his fortune by $1.4bn and Warren Buffett strikes $11.6bn deal to buy insurer Alleghany over a dinner

Mukesh Ambani is in the midst of pivoting his refining-focused conglomerate towards businesses that will better help him tap India’s billion-plus consumers. Photo: Reuters

Mukesh Ambani

Billionaire Mukesh Ambani’s Reliance Industries is weighing a possible bid for Walgreens Boots Alliance’s international drugstore unit, sources said.

Reliance is at an early stage of exploring the feasibility of an offer for the Boots chain, the sources said.

Mr Ambani, the 11th-richest person in the world with a net worth of $94.9 billion, according to Bloomberg, is in the midst of pivoting his traditionally refining-focused conglomerate towards businesses that will better help him tap India’s billion-plus consumers. He has also been chasing deals in Europe’s telecoms sector.

Boots could be valued at as much as £7bn ($9.12bn) in a sale, Bloomberg previously reported.

Deliberations are ongoing and there is no certainty Reliance will decide to pursue an approach for Boots, the sources said.

Walgreens kicked off the sale of Boots earlier this year. It’s drawn interest from private equity firms including Apollo Global Management and TDR Capital. It attracted Bain Capital and CVC Capital Partners, which joined forces and were considered early favourites before abandoning their pursuit.

The bidders that remain keen on Boots could also consider teaming up, one of the people said.

Walgreens is weighing a potential initial public offering of Boots, which runs a chain of about 2,200 stores in the UK, if buyout interest is muted, Bloomberg News reported previously.

Some of the private equity bids have been well below Walgreens’s desired price, increasing the chances of a paused sales process or listing, the sources said.

The US-based company is expected to make a decision in the coming weeks and may opt to keep a minority stake in Boots in any transaction, they said.

Boots also has smaller operations in Ireland, Norway, the Netherlands and Thailand, as well as an optician business and a suite of private-label beauty and personal care brands that could be included in a sale.

Walgreens has been shifting toward expanding into other healthcare businesses in recent months, as pharmacies face increased competitive pressure from Amazon and other online retailers.

In October, it agreed to invest $5.2bn in primary care provider VillageMD, doubling its stake in the company.

George Kaiser

George Kaiser, whose parents left Germany for the Oklahoma oil patch, was already a billionaire before Russia invaded Ukraine and threw the global energy market into turmoil.

Still, a well-timed initial public offering of his Excelerate Energy has added $1.4bn to his fortune and boosted his net worth to $9.2bn, according to the Bloomberg Billionaires Index.

“We’ve been focused on providing energy to markets for a long time,” chief executive Steven Kobos said. “We feel we’re at a great point in time after nearly 20 years.”

The Biden administration last month said it planned to export 15 billion cubic metres of gas to Europe this year to help countries slash Russian imports, but getting the fuel across the Atlantic Ocean is no small feat.

It’s a complex process that requires cooling the gas to about -162 degrees Celsius, which liquefies it, then loading it onto specialised ships. Once at its destination, the cargo is warmed and converted back into gas.

Excelerate, which Mr Kaiser founded in 2003, controls a fifth of the world’s fleet of 46 floating storage and re-gasification units, or FSRUs, which can handle the conversion while anchored offshore. The vessels are either built-to-order or converted from older LNG tankers and can be installed in a matter of months, while onshore import terminals require additional infrastructure and take years to build.

Several European countries are already making plans to acquire such vessels. Last week, Finland and Estonia announced they would be jointly renting an FSRU to supply the Baltic countries with gas.

Last year, Excelerate generated $41 million of income on sales of $888.6m. About half of that revenue came from its FSRU and terminal services businesses, with the remainder from buying and re-selling gas.

Excelerate is Mr Kaiser’s second major energy holding. His biggest asset is Kaiser-Francis Oil, a Tulsa-based independent oil and gas exploration company founded by his father. The younger Kaiser took over the business in 1969 after earning an undergraduate degree and an MBA from Harvard University.

Since then, Mr Kaiser, 79, has built it into a major independent oil and gas producer. According to data from energy research site ShaleXP.com, it produces about 26,000 barrels of oil and 117,000 MCF of gas a day.

“He’s bullish on our strategy,” Mr Kobos said of Kaiser. “That’s evidenced by the fact that this IPO is not a liquidity event.”

Kaiser controls all of Excelerate’s Class B voting shares, giving him 77 per cent of the company’s total combined voting power. The George Kaiser Family Foundation will control another 7.9 per cent. It’s receiving shares in Excelerate in exchange for two FSRU ships it owns.

The foundation is active in the Tulsa area and reported $3.7bn in net assets at the end of 2019.

While Mr Kaiser isn’t an Excelerate officer, he can appoint three of six directors and holds certain other rights through a shareholder agreement with the company. In the event of Mr Kaiser’s death, those rights will transfer to his foundation for five years.

Warren Buffett

A New York city dinner between Warren Buffett and Alleghany chief executive Joseph Brandon kicked off one of Berkshire Hathaway’s latest deal hunts.

The pair met for dinner on March 7, when Mr Buffett made it clear that Berkshire was interested in buying Alleghany for $850 a share, according to a regulatory filing.

That conversation would jump-start Berkshire’s bid for Alleghany, which culminated in a $11.6bn deal for the insurer announced later that month.

It’s one of the biggest acquisitions in years for Berkshire and Mr Buffett, its billionaire chief executive.

He has revved up his deal machine recently, with the conglomerate also buying up shares in Occidental Petroleum and revealing a new equity bet on HP.

At that dinner, Mr Buffett said the price would not include fees for financial advisers. That quirk resulted in an odd $848.02 announced deal price.

The fee for Goldman Sachs Group, which is advising Alleghany, would come out of the proceeds for insurer’s shareholders.

The agreement would have to survive some push-back by Alleghany’s negotiators.

Jefferson Kirby, the company’s chairman, pushed Mr Buffett on the price at a meeting in Omaha, asking him to increase the offer or eliminate the deduction for the financial adviser fee.

He also pushed for a lucrative – but often unattainable – feature in a Buffett deal: using Berkshire shares as a portion of the offer.

Mr Buffett, who has talked about his dismay in using Berkshire stock to buy Dexter Shoe and General Re, held firm.

Goldman ultimately contacted 23 potential strategic bidders and eight potential financial-sponsor bidders during a “go-shop” period to see if they’d have a superior offer for Alleghany, the filing shows.

Charlie Munger

Daily Journal, a newspaper and software business that counts billionaire Charlie Munger as an overseer of its stock portfolio, cut its stake in Chinese internet company Alibaba Group Holding by roughly half.

The Los Angeles-based company owned 300,000 American depositary shares in Alibaba at the end of March, according to a regulatory filing. That’s down from 602,060 at the end of last year.

Daily Journal’s current Alibaba holdings are valued at about $31m.

For years, Mr Munger led Daily Journal as chairman, in addition to his role as a vice chairman at Mr Buffett’s Berkshire Hathaway.

Daily Journal announced in March that the 98-year-old billionaire would step down from that role, but still hold a board seat and “continue to pay particular attention to matters with which he has been involved in the past, including the company’s securities portfolio”, according to a regulatory filing at the time.

He also said that he would donate $1m of his stock in the company to create an equity incentive plan.

Daily Journal is known for its collection of papers and for selling software to customers that include justice agencies and courts. The business also holds a collection of stocks in addition to its operating businesses, similar to Berkshire’s strategy of also investing while owning businesses.

Its stock portfolio consisted of five publicly disclosed investments at the end of March, which includes the Alibaba holding that it first started disclosing a year ago.

Mr Munger’s assistant said he had declined to comment on Daily Journal’s Alibaba stake.

Alibaba’s American depositary receipts slumped almost 50 per cent in 2021, and are down nearly 14 per cent this year.