Boots to reveal BHI arm plans

BOOTS looks set to bow to shareholder pressure and spell out plans for the future of its manufacturing arm, which produces Nurofen, Clearasil and Strepsils.

Executives have finally accepted that by the end of the group's current financial year, they must clarify whether they intend to keep the business, which turns over £500m a year, and try to expand by acquisition, or sell it to concentrate on retailing.

Boots has said in the past that it would like to find other brands to buy to add to Boots Healthcare International. But it has found itself outbid for potential purchases and insists it is not prepared to overpay just to increase BHI's size.

Now Boots, headed by chief executive Richard Baker, plans to spell out its plans for BHI next spring. BHI made profits of more than £80m last year and is well ahead of its target to secure profits of £100m by 2005/06.

Putting BHI up for sale would attract bids from the US and Europe and would bring a huge windfall for Boots shareholders. But it would involve disruption for Boots' remaining business, which uses BHI factories to make some of its products.

Boots gives a trading update this week, which is expected to show like-for-like sales growth slightly down on the 4.4% reported in July.

Boots is to quit its London office in Mayfair and move into a base above a new flagship store being built in Oxford Street.