Private equity firm Sycamore Partners is in discussions with retail pharmacy giant Walgreens Boots Alliance about a potential deal that could take the company private as early as next year, according to a report by The Wall Street Journal.
If the deal moves forward, Sycamore is expected to sell off parts of Walgreens or collaborate with partners to restructure the business.
Headquartered in Deerfield, Illinois, Walgreens has long attracted interest from private equity firms. In 2019, KKR targeted the pharmacy chain when it had a market capitalisation of over $56bn and carried nearly $17bn in debt.
News of the latest talks boosted Walgreens’ stock price by more than 18% on Tuesday, reaching $11.12 per share. However, this comes after a significant decline over the past year, with shares dropping from a high of $27.05 to a low of $8.08.
Sycamore Partners, known for its $7bn acquisition of Staples in 2017, is eyeing Walgreens as its next major investment.
The potential sale follows a turbulent period for Walgreens, which has faced multiple rounds of layoffs over the past year and plans to close 1,200 stores over three years, with 60 closures already underway.
During Walgreens’ October earnings call, CEO Tim Wentworth acknowledged the challenges ahead, noting that 75% of its 8,000 stores remain profitable. He described fiscal 2025 as a critical “rebaselining year” for the company’s long-term turnaround strategy.
Retail analyst Neil Saunders of GlobalData Retail called the potential sale to Sycamore an “elegant solution” for a company grappling with a difficult recovery.
“Cuts would undoubtedly be part of the plan, but growing the business would be far more challenging given the entrenched issues across its healthcare, pharmacy, and retail divisions,” he added.
