Walgreens Boots Alliance, a company with nearly a century of public trading history, is transitioning to private ownership in a deal valued at up to $23.7 billion. This decision follows a challenging period in the public markets, during which Walgreens lost a significant portion of its market cap and closed over 10% of its locations. Private equity firm Sycamore Partners has agreed to acquire Walgreens for $11.45 per share in cash. The total deal value, including debt and potential future payouts, could reach $23.7 billion.
Walgreens’ shares have seen an 80% decline over the past five years, though recent reports of the privatization talks have slightly boosted its stock performance. Sycamore Partners, known for its focus on consumer and retail sectors, plans to continue operating Walgreens under its existing brand portfolio from its Chicago base.
WBA CEO Tim Wentworth emphasized that the complexities of Walgreens’ ambitious turnaround strategy are better managed privately. He expressed confidence in Sycamore’s track record in retail turnarounds. Like its competitors CVS and Rite Aid, Walgreens has faced challenges such as declining prescription reimbursements, resulting in a market value drop from $100 billion a decade ago to approximately $9.5 billion.
In October, Walgreens announced the closure of approximately 1,200 locations by 2027, representing a significant increase from the 300 underperforming stores identified for closure in June 2024. These closures are part of a multiyear optimization program aimed at addressing unprofitable outlets.
Walgreens’ history includes the acquisition of Duane Reade in 2010 and Alliance Boots in 2014. Stefano Pessina, the company’s executive chairman and largest individual shareholder, will reinvest his 17% stake in the privatized entity. Industry analysts suggest that Sycamore may divest assets like the UK chain Boots to maximize returns.
The drugstore sector, including Walgreens, faces mounting pressures from reduced prescription reimbursements and competition from online retailers like Amazon. Additionally, larger retailers such as Target and Dollar General further strain drugstore profits. Walgreens Boots Alliance anticipates the transaction to conclude in the fourth quarter of 2025. — news from CNN