Sycamore Partners is close to finalizing a deal to acquire Walgreens Boots Alliance Inc., potentially ending the pharmacy chain’s tenure as a public company and paving the way for a major restructuring, according to sources familiar with the matter, Bloomberg reports.
The private equity firm and Walgreens, headquartered in Deerfield, Illinois, are finalizing the terms of a transaction that could be announced as early as this week. The Wall Street Journal reported that Sycamore’s bid values Walgreens at approximately $10 billion, with an offer of $11.30 to $11.40 per share in cash.
A takeover could lead to the breakup of Walgreens, which operates various businesses, including the UK-based pharmacy chain Boots and US healthcare provider VillageMD. Analysts have long suggested that Walgreens’ broad business portfolio presents challenges for a private buyout, making a division of the company a likely outcome.
The acquisition would mark a turning point for Walgreens Chairman Stefano Pessina, who has been navigating the company through industry challenges. Pessina, a key figure in Walgreens’ 2014 merger with Alliance Boots, is expected to roll over his stake in the company as part of the deal.
Walgreens’ stock has declined by over 50% in the past year, bringing its market valuation to roughly $8.9 billion. The company’s stock dipped further in late February amid reports that Sycamore’s offer carried a relatively low premium.
Walgreens operates several well-known brands, including drugstore chain Duane Reade, specialty pharmacy group Shields Health Solutions, and beauty brands such as NICE! and Soap & Glory. However, the company has faced mounting pressure from declining prescription reimbursement rates and increased competition from online retailers like Amazon.
Sycamore Partners, known for its investments in struggling retailers and consumer brands, may look to restructure Walgreens’ debt by attaching financial obligations to specific business units rather than the entire company.
This is not the first time Walgreens has explored a private buyout. In 2019, private equity firm KKR & Co. considered acquiring the company in what would have been the largest leveraged buyout in history. However, the discussions, led by then-CEO Pessina, ultimately did not materialize.
While Sycamore and Walgreens are in advanced negotiations, the deal could still face delays or fall through, sources cautioned. Representatives for both companies have declined to comment on the ongoing discussions.
