Walgreens Boots Alliance has been acquired by private equity firm Sycamore Partners in a deal worth nearly $10 billion, as the retailer seeks to turn around its fortunes after years of financial difficulties but still couldn’t do it.Announcing the deal on Thursday, the pharmacy company said Sycamore would pay $11.45 per share, with the potential for shareholders to receive an additional $3 per share under certain conditions. The agreement would take the company private, allowing it to restructure its business away from the pressures of Wall Street. Tim Wentworth, Walgreens Boots Alliance CEO said, “Throughout our history, Walgreens Boots Alliance has played a critical role in the retail healthcare ecosystem. We are focused on making healthcare delivery more effective, convenient and affordable as we navigate the challenges of a rapidly evolving pharmacy industry and an increasingly complex and competitive retail landscape.”The CEO further added that Sycamore will provide the company with the expertise and experience of a partner with a strong track record of successful retail turnarounds.The buyout deal values Walgreens at almost $24 billion when including debt, and Sycamore’s offer represents a nearly 30 per cent premium on its share price from December, when reports of a possible sale first surfaced.Walgreens has also been working to boost its finances, including suspending its quarterly dividend, ending a 90-year streak, and reducing its stake in drug distributor Cencora to free up cash for debt repayment.Ultimately, improving cash flow remains a top priority, whether the company stays public or goes private. “Management has not been shy about its push to improve the cash flow generation profile as part of the turnaround plan,” Leerink Partners analyst Michael Cherny noted in a February report.Founded in 1901, Walgreens has been a public company since 1927 but has faced growing challenges in recent years, due to low prescription reimbursement rates, rising costs, increasing theft, and price-sensitive customers shifting to cheaper alternatives. The company already began a restructuring process, including plans to close 1,200 of its roughly 8,500 US stores. This follows a previous downsizing, which saw it reduce its store count after acquiring parts of Rite Aid in 2018.Beyond store closures, Walgreens has been reviewing its US healthcare operations, including a potential sale of its VillageMD clinic business, which it had aggressively expanded. This move comes after the company’s shares lost nearly two-thirds of their value in 2023.Walgreens operates nearly 3,700 international stores in the UK, Mexico, Thailand, and Ireland. The buyout comes at a time of major shifts in the industry, with rival Rite Aid recently emerging from bankruptcy as a private company, while competitors like CVS, Walmart, and Kroger continue to dominate the US pharmacy market.
Struggling retailer Walgreens to be acquired by Sycamore Partners in $10 billion deal
