Walgreens going private in blockbuster private equity deal with Sycamore Partners
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Walgreens Boots Alliance — whose namesake chain is one of the largest retailers in the U.S. and an iconic brand in the drugstore sector — has reached a deal to be taken private.
Why it matters: The company has been struggling to keep up with nimbler retailers, rising medical costs, labor demands and digital pharmacy alternatives.
Driving the news: Private equity firm Sycamore Partners has agreed to acquire Walgreens Boots Alliance, whose assets include Walgreens, Duane Reade and European pharmacy chain Boots.
- Sycamore is paying nearly $10 billion in cash for the company. When considering the assumption of debt, plus the possible payment of an additional $3 per share, the deal could be worth up to $23.7 billion.
- Walgreens' market capitalization was $118 billion at its peak in 2015.
State of play: The company — whose eponymous brand traces its roots to 1901 — will continue to operate its current chains and maintain its headquarters in the Chicago area.
- "While we are making progress against our ambitious turnaround strategy, meaningful value creation will take time, focus and change that is better managed as a private company," Walgreens CEO Tim Wentworth said in a statement. "Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds."
- "This transaction reflects our confidence in WBA's pharmacy-led model and essential role in driving better outcomes for patients, customers and communities," Stefan Kaluzny, managing director of Sycamore Partners, said in a statement.
By the numbers: Walgreens Boots Alliance has more than 311,000 employees globally with about 8,500 stores in the U.S.
- After years of financial woes stemming partially from misplaced COVID-era bets, Walgreens can work on righting the ship in private, without the pressure of the public markets.
- Walgreens is currently working with advisors to restructure or sell off its VillageMD primary care unit, while weighing options for its Summit/CityMD assets.
💭 Our thought bubble via Axios Pro's Claire Rychlewski: Walgreens' specialty pharmacy business Shields Health — which it acquired over the course of 2021 and 2022 for about $2.34 billion — is arguably the company's crown health jewel.
- That asset — worth a reported $4 billion-plus — would fit nicely in the portfolios of various drug distributors, which have been bulking via acquisition over the last year.
Zoom in: The deal includes a 35-day "go-shop" period during which Walgreens can pursue a more lucrative bid.
