Walgreens Boots Alliance, the owner of the UK pharmacy chain Boots since 2014, has been acquired by US private equity group Sycamore Partners in a $10bn (£7.7bn) deal. The agreement comes after a significant decline in Walgreens’ share price over the past decade. Sycamore will pay $11.45 per share, representing an 8% premium over Walgreens’ closing price in New York on Thursday night. However, this is far lower than the $85 per share valuation the company achieved in 2015 when it was valued at over $90bn.
Walgreens, which employs 311,000 people globally, has faced challenges from competition with online retailers and reduced payments from health insurers. Its share price has nearly halved in the past year. The acquisition raises concerns about potential store closures, including Boots locations, amid warnings that cuts to NHS funding have made running pharmacies less viable. Dr. Leyla Hannbeck of the Independent Pharmacies Association noted that stagnated NHS funding could lead the new owners to divest unprofitable Boots pharmacies.
Ornella Barra, Walgreens’ head of international, reassured employees in a company-wide email, stating that “nothing is changing.” She emphasized Sycamore’s confidence in Boots’ role in the UK, Ireland, and globally, urging staff to remain focused on their work. Sycamore Partners, which owns US stationery retailer Staples and restaurant chain Playa Bowls, previously held stakes in brands like Kurt Geiger and made offers for Ted Baker in 2022.
The deal, expected to close in the fourth quarter of this year, includes a 35-day “go-shop” period during which Walgreens may evaluate other offers. Walgreens Boots operates approximately 12,500 pharmacies globally, including 1,900 Boots stores. Walgreens CEO Tim Wentworth stated that the company’s turnaround strategy would be better managed as a private entity. Sycamore’s managing director, Stefan Kaluzny, expressed confidence in Walgreens’ pharmacy-led model and its role in improving outcomes for patients and communities.
Analysts, including Michael Cherny of Leerink Partners, noted the deal’s completion without expecting competing bids due to its size and complexity. — news from The Telegraph