Search Here

Walgreens Boots Alliance is close to finalizing a $10 billion buyout deal with private-equity firm Sycamore Partners, which could mark the end of the company's time as a publicly traded entity.

Negotiations between the two parties are in advanced stages, and sources have indicated that the deal may be completed as soon as Thursday, though a last-minute delay could still occur.

Under the deal, Sycamore Partners is expected to pay between $11.30 and $11.40 per share in cash, with the potential for contingent value rights, allowing shareholders to benefit if certain financial goals are met, NewYork Post said.

If the transaction moves forward, Sycamore is likely to retain Walgreens' core US retail pharmacy business and may sell or take public other segments of the company, such as its UK-based Boots pharmacy chain and VillageMD health care provider.

Walgreens, once a dominant player in American retail, has struggled in recent years due to financial challenges, declining stock prices, and growing competition from online retailers like Amazon.

In 2024, the company's value dropped below $8 billion, a significant fall from its 2015 market capitalization of over $100 billion. As part of its efforts to cut costs, Walgreens recently announced the closure of 1,200 stores nationwide, including five in Southern California.

Walgreens Struggles as Only 25% of Stores Are Profitable

The company has faced ongoing financial strain, with only about one-quarter of its 8,700 stores being profitable.

Unlike its main competitor CVS Health, which expanded into insurance and pharmacy benefits, Walgreens stayed focused on its traditional retail pharmacy model.

According to Yahoo, a foray into primary care services through VillageMD also failed to reverse its fortunes. Earlier this year, Walgreens briefly saw a boost in stock prices after reporting better-than-expected earnings, but the company's ongoing store closures continued to affect its overall financial health.

In addition to its retail struggles, Walgreens has been involved in legal issues, including a lawsuit filed by the Justice Department, accusing the company of contributing to the opioid crisis by improperly dispensing prescription painkillers. As a result, Walgreens suspended its quarterly dividend in order to conserve cash.

Sycamore Partners, a private equity firm known for investments in consumer brands like Staples and Playa Bowls, is now in talks to acquire Walgreens, with plans to restructure the company if the deal is completed.

This could involve breaking up Walgreens into separate businesses, given the company's diverse range of assets, including Duane Reade and various beauty brands.

While the deal could reshape Walgreens and end its troubled run as a public company, discussions are still ongoing, and it remains to be seen if the acquisition will be finalized.

Tags

Buyout