Private-Equity Firm Strikes Deal to Buy Walgreens
A New York private-equity firm has agreed to take private Walgreens Boots Alliance Inc. in a deal that could ultimately be valued at $27.3 billion.
If the purchase plan is completed, Sycamore Partners Management LP will pay $11.45 per share of Walgreens, which runs about 12,500 retail pharmacies around the United States as well as in Europe and Latin America. That values the company’s equity at about $10 billion; Sycamore also will take on Walgreens’ debt.
Walgreens has been struggling with weak consumer demand for several quarters and last year also had to book a $5.8 billion charge against earnings because its primary-care investments had lost a chunk of their value. From the beginning of 2023 until Dec. 8 of last year, when Sycamore’s acquisition interest was first reported, Walgreens shares (Ticker: WBA) had fallen from about $37 to below $9.
“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,” CEO Tim Wentworth, who took over in October 2023 after the exit of Roz Brewer, said in a release. “Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds.”
Walgreens Executive Chairman Stefano Pessina, who led the business from 2015 until 2021, has pledged his shares and those of his holding company—combined, they account for 17% of Walgreens’ stock—to the Sycamore deal and will reinvest his proceeds and more cash into the private Walgreens. If approved by shareholders, the deal is expected to close late this year.
Founded in 2011, Sycamore specializes in consumer, distribution and retail companies and has raised about $10 billion. Among its other current and past investments are Staples, department store operator Belk and apparel retailer Hot Topic.
“Sycamore has deep respect for WBA’s talented and dedicated team members, and we are committed to stewarding the company’s iconic brands,” Stefan Kaluzny, a managing director of Sycamore Partners, said. “This transaction reflects our confidence in WBA’s pharmacy-led model and essential role in driving better outcomes for patients, customers and communities.”
Still up in the air is the future is for Walgreens’ healthcare service assets, led by its 53% stake in Village MD, the entity that controls the Village Medical clinic chain as well as Summit Health and CityMD. Wentworth and his team said last year that they planned to sell at least part of that business—which finished 2024 with an adjusted EBITDA loss of $141 million on $6.4 billion in revenue—to refocus Walgreens on its core pharmacy work.
The Sycamore transaction is structured to also pay Walgreens shareholders up to $2.7 billion from one or more Village MD deals if and when they happen. And while executives are assuming they’ll sell assets in certain markets this year, investors shouldn’t expect a fire sale.
In their deal announcement, Walgreens and Sycamore said that a variety of paths forward remain on the table. A committee of directors will, they added, look to maximize Walgreens’ value in various ways, “including actions to significantly enhance operational performance and strengthen the balance sheet of the businesses, ahead of any future monetization transaction or transactions.”
