Boots seeks deal with Budgens

Alliance Boots, the high street chemist that is selling nearly half the company to the US firm Walgreens, is in talks with the group behind the grocer Budgens about stocking its food products in Boots' outlets.

Boots launched a pilot with Waitrose in 2010 to sell each other's products but the partnership came to an end last month. Musgrave, whose brands also include Londis in the UK, as well as Supervalu and Centra in the Republic of Ireland, confirmed it has had discussions with Alliance Boots. The health and beauty giant declined to comment, but it is understood that Boots has held talks with a number of grocers recently. Waitrose stopped selling certain Boots' products, such as its No7 skincare and cosmetics, in January, and the chemist chain followed suit with the grocer's sandwiches and snacks in May.

Walgreens, America's biggest chemists' chain, is buying 45 per cent of Alliance Boots' equity for $6.7bn (£4.3bn), but it has the option to buy the remaining 55 per cent of shares within two and a half years. Based on Walgreens' share price, the second step of the transaction is valued at $9.5bn.