Walgreens Boots Alliance is set to be taken private by private equity firm Sycamore Partners in a $10bn deal, marking the end of nearly a century of public trading for the US pharmacy giant, according to a report by Reuters.
The takeover comes as Walgreens struggles with declining drug margins, increased competition from Amazon and Walmart, and missteps in strategic investments. Walgreens’ valuation has plummeted over the past decade, with its market capitalisation dropping 90% since 2015 to just $9.3bn.
Under the agreement, Sycamore will pay $11.45 per share, representing an 8% premium to Walgreens’ closing price on Thursday. Additionally, Walgreens shareholders may receive up to $3 per share in future payouts linked to the monetisation of the company’s interests in primary-care provider VillageMD.
Including debt and lease obligations, the transaction carries a total enterprise value of $23.7bn, according to Leerink Partners. Sycamore reportedly structured its final bid based on a worst-case valuation, considering asset sales or a potential break-up scenario, according to a source close to the deal.
Known for acquiring and restructuring distressed retail and consumer brands, Sycamore Partners has previously invested in companies including Staples, Talbots, and Nine West. Analysts expect the firm to divest Walgreens’ non-core assets, reduce operating costs, and potentially close underperforming locations.
Walgreens has spent the past six years seeking a buyer or restructuring its business. In 2019, private equity giant KKR offered $70bn for the company, but negotiations stalled. The firm has since battled shrinking cash flow, with over half of its $7bn net debt maturing in 2025.
Once a global powerhouse with 21,000 stores across 25 countries, Walgreens now operates 12,000 stores in just eight countries, employing 312,000 people — a sharp decline from its 450,000-employee peak.
With Sycamore at the helm, Walgreens is expected to offload assets such as Alliance Boots and potentially exit VillageMD, which has been a financial drain. Analysts believe the go-shop period included in the deal is unlikely to attract competing offers due to Walgreens’ complex structure and financial challenges.
