Sycamore Partners' attempt to offload Boots has hit a setback as Australian drug distributor Sigma Healthcare exited the auction. The UK pharmacy chain, valued at roughly £5 billion, has been courting multiple bidders since Sycamore announced the sale last year. Sigma’s withdrawal narrows the field and could pressure the seller to accept a lower offer in the near term, forcing a concession.

Sigma had only confirmed its interest last week after the Australian Financial Review reported preliminary talks. Within days, the company announced it was withdrawing, citing a preliminary review that found the transaction would not meet its strategic and capital investment objectives. The move underscores the difficulty of finding a buyer willing to fund a large European retail pharmacy platform.

With fewer suitors, Sycamore may have to lower its valuation expectations or consider alternative structures such as a joint venture. Investors will watch how the reduced competition affects the final price, especially given Boots' extensive store network and brand strength in the UK market. The sale now hinges on securing a financially aligned partner that can meet Sycamore's return targets.