Boots has agreed to transfer £4.8bn of pension obligations to insurer Legal & General in a deal that potentially paves the way for a sale by owner Walgreens Boots Alliance.
Legal & General will take on the assets and liabilities of the scheme, which covers 53,000 current and future retirees, in one of the largest-ever transactions in the UK.
By offloading Boots’ pension liabilities, Walgreens Boots Alliance has removed an obstacle towards potentially selling the business.
It attempted to sell the company last year but abandoned the attempt due to “unexpected and dramatic” changes in market conditions.
At the time, Walgreens said there had been “significant interest” in Boots but bids for the company failed to reflect its value.
Boots managing director Sebastian James said: “We are very pleased to have achieved the gold standard outcome for our pension scheme and to have fully secured the benefits of all members with a highly respected insurer. This will provide greater certainty to both the scheme members and to Boots, and is an excellent outcome for both parties.”
Chair of Boots pension scheme Alan Baker said: “This agreement with Legal & General gives added protection to our members’ long-term benefits by removing market uncertainty and other financial exposures.
“We welcome the additional payment from Boots, in addition to the sum it has already committed. As a result, the scheme will not be reliant on Boots to pay benefits to members and pensions will be protected for decades to come.
“I would like to take this opportunity to thank my fellow trustee directors and our predecessors, the scheme officers and advisers for their hard work over many years to reach this positive outcome for our members.”
The announcement comes on the same day that UK life insurer Rothesay agreed to take on £4bn of pension liability for the Co-op.
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