Boots Nears $9bn Sale as HSBC Profit Tilts to China
Cash is changing hands in businesses income investors already follow, and in one business they will not get to own. A British pharmacy chain is close to a $9 billion sale that would keep it private. HSBC draws about half its pretax profit from China and Hong Kong. In Germany, the largest chemicals group has watched a 10.3 billion euro bid get turned down as too low.
A pharmacy chain stays off the public market
Boots has waited more than four years for a settled owner. Walgreens Boots Alliance tried to sell the chain in 2022 and found no buyer. A later plan to list in London was dropped. The live path is a sale at about $9 billion. The deal is not final. An announcement could come as soon as next week.
The buyer in view is the Canadian family that controls Primark and owns Fortnum and Mason. That group sold Selfridges for 4 billion pounds in 2022. Sigma Healthcare, an Australian pharmacy group, was the other name in the talks.
The parent went private last year in a $24 billion buyout alongside Sycamore Partners, then split into five separate companies. The founding family still holds 44 percent of each piece. If this sale closes, Boots leaves that family for the first time in two decades.
The shops are in better shape than in 2022. Beauty brands and demand for weight loss drugs have lifted UK retail and pharmacy sales. That is why $9 billion is even on the table. A repaired cash generator is heading to a private owner. There will be no new London listing and no dividend attached to it.
Half of HSBC profit sits in Greater China
HSBC is a core bank in many dividend portfolios, and the profit map has narrowed. About 50 percent of pretax profit comes from China and Hong Kong. Growth leans further the same way. The bank has added 2 million customers in Hong Kong since the start of 2025, many of them mainland clients who want wealth held offshore. Almost half of open jobs are in Hong Kong and China.
The UK side is quiet. It has not produced a deal on the scale of the $14 billion Hang Seng Bank transaction. Growth there rests on net interest income. Fee income, which ties up less capital, has slipped over recent years.
The risk sits in the same place as the growth. A slower Chinese economy would slow those wealth flows. Money held offshore is also in the path of policy swings in Beijing. That includes the push against excess wealth that began in 2021, probes into older foreign capital gains, and a newer tax drive aimed at residents who keep assets in Hong Kong and abroad. If the flows slow, revenue can fall while the extra cost base remains. A bank dividend is only as steady as the profit behind it.
A chemicals bid the seller called too low
BASF, the largest chemicals company in the world, offered 10.3 billion euros for German rival Evonik. The sector is weak, and the bid is a consolidation attempt. Evonik turned the opening price down as too low.
A higher offer has to clear more than ordinary shareholders. The largest holder is the RAG foundation, and senior German officials sit on its board. For income investors, 10.3 billion euros is a marker. A strategic buyer sees value there. The shareholder that can block the deal does not. Until those prices meet, payouts rest on operating cash in a weak industry, not on a sale.
A second German asset is in a similar spot. The family that owns half of defense group KNDS wants approval to sell, after a listing plan faded. The minimum value discussed for that half is 12.5 billion euros. A pharmacy chain and a defense group have both lost the public route. Private cash is setting the price.
Berlin holds the vote on a giant telecom deal
Deutsche Telekom has been working since April on a combination with its US mobile business, TMUS. The German parent is worth about $145 billion. The US business is worth about $175 billion.
The German state can stop it. The government owns 14 percent of Deutsche Telekom. State bank KfW owns another 14 percent. Together that is 28 percent. Berlin wants money spent on telecom and data networks at home. A combination that sends billions into the US business pulls cash the other way.
Cash used on a merger does not raise the dividend. Cash kept in the domestic network still does not lift the next payout. Shareholders should read the state stake before they assume a richer distribution.
What this means for income investors
Private buyers are taking assets that stock markets hoped to list. Boots at about $9 billion, and a defense stake with a 12.5 billion euro floor, are in sale talks after listing plans died. Income investors do not collect a dividend from a company that never trades.
Payouts at two large names now hinge on one region or one shareholder. HSBC earns about half its pretax profit in Greater China and Hong Kong, after adding 2 million Hong Kong customers since the start of 2025. Deutsche Telekom cannot fold in a $175 billion US unit unless the German state agrees. A high yield on paper does not fix that concentration.
Bonds did not give equity income an easier hurdle. August core PCE rose 0.2 percent on the month, below a 0.3 percent forecast, and 3.0 percent on the year, below a 3.3 percent forecast. Shares firmed. Bonds did not. One reading of the latest rate increase is that it was a reset, not the start of a long run of hikes, while strong share prices have kept financial conditions looser than the policy rate alone implies. Until yields fall, a concentrated profit mix, or a deal that uses cash, still has to beat a stubborn cash alternative.