- Walgreens Boots Alliance is nearing a $10B deal to go private, led by Sycamore Partners.
- Sycamore proposed a cash offer of $11.30 to $11.40 per share, along with potential contingent value rights.
- The deal is expected to keep Walgreens’ core US retail business and may lead to the sale or public offering of other parts of the company.
- Walgreens’ market value has plummeted from its peak of $100B in 2015 to under $8B in 2024, amid struggles in its prescription business.
- CEO Tim Wentworth has been focused on closing unprofitable stores and scaling back the company’s healthcare investments, with plans to shutter another 450 locations.
Walgreens Boots Alliance (WBA) is nearing a $10B privatization deal with Sycamore Partners to take the struggling drugstore chain off the public market, as reported by WSJ.
The deal, which could be completed as early as Thursday, is currently being finalized with Sycamore offering between $11.30 and $11.40 per share in cash.
The transaction might also include contingent value rights, which would allow the value to increase if certain future targets are met.
A Historic Shift
This potential take-private transaction marks a significant shift for a company that has been publicly traded since 1927 and was once a hallmark of American retail.
Walgreens, which peaked at a market value of $100B in 2015, saw its value fall to under $8B by late 2024.
The company has faced many challenges, struggling with squeezed margins in its prescription business, while its main rival, CVS Health (CVS), diversified into insurance and pharmacy benefits.
Sycamore’s Strategic Vision
Should the deal close, Sycamore Partners is expected to keep Walgreens’ core US retail business while possibly selling off or taking public other parts of the company.
The private equity firm, known for investments in retail and consumer sectors, seeks to revitalize Walgreens, which has faced declining stock prices and struggles to turn around its core business.
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Sycamore’s past deals, such as its acquisition of Staples for $6.9B in 2017, have focused on optimizing distressed assets.
Under current CEO Tim Wentworth, Walgreens has been scaling back its healthcare footprint and focusing on its retail operations. In recent months, the company has streamlined operations, including closing unprofitable stores and planning to shut down an additional 450 locations.
Despite a small uptick in stock prices following better-than-expected earnings in early January, Walgreens faced further setbacks, including a lawsuit from the Justice Department over its role in the opioid crisis. In response to financial pressures, Walgreens also suspended its quarterly dividend.
A Historic Shift
This deal would mark a historic change for Walgreens, a company founded over 120 years ago. With its ubiquitous presence on street corners, Walgreens once symbolized American retail.
The move to go private comes after years of declining market value, and Walgreens—like so many other retailers—is struggling to adapt to an evolving consumer and healthcare landscape.
