Walgreens Boots Alliance (WBA) finalized a $10 billion deal, worth as much as $23.7 billion, with Sycamore Partners to go private after four months of negotiations, the companies announced Thursday.
The drugstore giant’s stock jumped almost 7% in premarket trading on Friday after the news that the company was preparing to exit the public markets.
Sycamore is a New York-based private equity firm that specializes in retail business investments. It has invested in brands like Staples, Ann Taylor Loft, Aéropostale, and Express.
Walgreens entered into a definitive agreement to be acquired by an entity affiliated with Sycamore, the company said in a statement late Thursday. Shareholders will receive a total of $11.45 per share in cash, or $10 billion, at the closing of the Sycamore transaction, the statement said. The additional value in the deal comes from an added $3 in future monetization of the company’s debt and equity interest in VillageMD.
“Throughout our history, Walgreens Boots Alliance has played a critical role in the retail healthcare ecosystem,” CEO Tim Wentworth said in the statement. “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.”
“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,” he added.
The deal includes all elements of Walgreens, including VillageMD, which the company is winding down its stake in, and a specialty pharmacy unit.
It also includes the Alliance Boots business, which was acquired in 2014 and is one of the company’s strongest assets.
Walgreens pharmacy benefit manager (PBM) is also part of the deal. It, too, has been deemed a strong asset by investors, but it never captured significant market share against the three largest PBMs: UnitedHealth’s Optum RX (UNH), CVS’s Caremark, and Cigna’s Express Scripts (CI).
Walgreens stock climbed when the deal was first reported in December as investors looked for a shake-up. The company has been downgraded by a few firms and has a majority of Hold ratings — 11 total — as of this week.
Walgreens, valued at more than $100 billion in 2015, has dropped in the past couple of years to under $10 billion as it struggled to prove its value in the growing e-commerce environment. For fiscal year 2024, Walgreens reported revenue of $147 billion, up 6% year over year. But the company also reported a loss per share of $10.
Sign in to access your portfolio
In This Article:
Recommended Stories
Walgreens to go private in $10B deal
Check out what’s clicking on FoxBusiness.com.
Drugstore chain Walgreens Boots Alliance on Thursday announced that it will go private.
The struggling company entered into an agreement with private equity firm Sycamore Partners valued at $10 billion. Sycamore will pay $11.45 per share, a premium of 8% to the stock’s closing price of $10.60 on Thursday. Shares of the company rose nearly 6% in extended trading.
Walgreens shareholders could also receive an additional $3 in cash from future monetization of the company’s debt and equity interests in VillageMD.
WALGREENS COULD ‘AGGRESSIVELY’ CUT COSTS IF PRIVATELY OWNED, ANALYST SAYS
Walgreens Boots Alliance entered into an agreement with private equity firm Sycamore Partners valued at $10 billion. (Leonardo Munoz/VIEWpress / Getty Images)
The company’s market value has shrunk to just more than $9 billion from almost $100 billion a decade ago as margins on drug prices fell and consumers shifted to cheaper rivals Amazon and Walmart to fill their prescriptions and purchase toiletries.
And when rivals diversified into insurance or prescription management, Walgreens invested billions buying other pharmacy chains despite the trend away from in-store shopping.
As a result, the second-largest U.S. pharmacy chain’s debt and lease obligations have ballooned to almost $30 billion.
Walgreens shareholders could also receive an additional $3 in cash from future monetization of the company’s debt and equity interests in VillageMD. (Luke Sharrett/Bloomberg via Getty Images / Getty Images)
“As a private company, WBA [Walgreens Boots Alliance] would have more flexibility to make major changes to the business, in our view, and aggressively cut costs to try to tackle recent challenges with pharmacy operating margins and declining retail product sales from increased online competition,” CFRA Research analyst Paige Meyer told FOX Business in December.
WHY NEIGHBORHOOD PHARMACIES ARE CLOSING
In October, the company, which has been struggling with competition from rivals like Amazon, announced plans to close at least 1,200 stores over the next three years. This move is part of its effort to shut down a “significant” number of underperforming locations across the U.S. in response to these challenges.
In October, the company, which has been struggling with competition from rivals like Amazon, announced plans to close at least 1,200 stores over the next three years. (istock / iStock)
Sycamore Partners, a private equity firm that specializes in retail and consumer investments, has a track record of acquiring distressed retailers for profit; among them were brands such as Staples, Talbots and Nine West.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
FOX Business’ Daniella Genovese and Reuters contributed to this report.
Get a brief on the top business stories of the week, plus CEO interviews, market updates, tech and money news that matters to you.
By clicking subscribe, you agree to the Fox News Privacy Policy and Terms of Use, and agree to receive content and promotional communications from Fox News. You understand that you can opt-out at any time.
Quotes displayed in real-time or delayed by at least 15 minutes. Market data provided by Factset. Powered and implemented by FactSet Digital Solutions. Legal Statement.
This material may not be published, broadcast, rewritten, or redistributed. ©2025 FOX News Network, LLC. All rights reserved. FAQ – New Privacy Policy
Sycamore will pay $11.45 per share
FOX Business Flash top headlines for March 6
Market Futures
Recommended
Trump admin has ‘delivered on the promises’ of crypto utilization: Fred Thiel
President Trump talks tariffs: ‘We’re not going to let people take advantage’ of US
Hershey’s ‘strong brands’ make it a good ‘long-term’ investment: Expert
DOGE cuts are the beginning of something big: Adam Kobeissi
Trump tariffs are an opportunity to bring manufacturing home: Charles Payne
Wall Street expert reveals 3 ‘circuit breakers’ to stop market downturn
Magnificent Seven volatility means opportunity for investors: Danielle Shay
AI growth is going to ‘flatline’ in 2026, expert predicts
Market expert spotlights the ‘shock’ to the system that is impacting stocks
Trump ‘breathed life’ back into US crypto legislative process, expert says
Trump halts tariffs on some Mexican products after speaking to its president
Trump tariffs are ‘balancing the playing field’ for steel manufacturing: Tech CEO
Markets hate uncertainty: Expert on tariffs
Alberta’s premier cautions a US-Canada ‘tariff war’ causes ‘more pain’ than gain
America needs a Fed member who supports the ‘blue collar comeback’: Sen. Tim Scott
SEC Crypto Task Force is ‘something that we should have been done years ago,’ acting chairman says
Bitcoin is a savings account that empowers every American, expert explains
Charles Payne: Great periods of economic growth have been associated with tariffs
Investment strategist is ‘feeling bullish’ about markets despite tariff uncertainty and growth concerns
People are getting ‘overly lathered up about the whole tariff thing’: Stephanie Pomboy
Walgreens agrees to be acquired by private equity firm for almost $10 billion
By
The Associated Press
A sign for Walgreens Pharmacy in Pittsburgh.
NEW YORK — Walgreens Boots Alliance says it has agreed to be acquired by private equity firm Sycamore Partners as the struggling retailer looks to turn itself around after years of losing money.
Walgreens said Thursday that Sycamore will pay $11.45 per share, giving the deal an equity value just under $10 billion. Shareholders could eventually receive up to another $3 per share under certain conditions.
A buyout to take the drugstore chain private would give it more flexibility to make changes to improve its business without worrying about Wall Street’s reaction. The company has already been making some big changes as it seeks to turn around its business. Walgreens has been a public company since 1927.
Walgreens, founded in 1901, has been dealing with thin prescription reimbursement, rising costs, persistent theft and inflation-sensitive shoppers who are looking for bargains elsewhere. Walgreens is in the early stages of a plan to close 1,200 of its roughly 8,500 U.S. locations.
The Deerfield, Illinois, company had already shed about a thousand U.S. stores since it grew to nearly 9,500 after buying some Rite Aid locations in 2018.
The company also said last August that it was reviewing a U.S. health care operation it had expanded aggressively, and it might sell all or part of its VillageMD clinic business. That announcement came less than two years after the company said it would spend billions to expand it.
Shares of Walgreens shed nearly two thirds of their value last year. Walgreens said the transaction price represents a nearly 30% premium to the share price in December when reports of a deal first surfaced. Walgreens CEO Tim Wentworth confirmed in January that a sale process for the business was underway. Including debt, the value of the deal is just under $24 billion, the company said.
Walgreens said earlier this year it was making progress improving prescription reimbursement.
Walgreens has also taken steps to preserve cash. It said in January that it was suspending a quarterly dividend it has offered for more than 90 years, and it’s been reducing its stake in the drug distributor Cencora this year to get cash in part to pay down debt.
Ultimately, the company has to improve its cash flow, whether it remains publicly traded or goes private, Leerink Partners analyst Michael Cherny said in a Feb. 23 research note.
“Management has not been shy about its push to improve the cash flow generation profile as part of the turnaround plan,” the analyst wrote. “Without cash flow, none of the value cases work.”
Walgreens Boots Alliance Inc. also runs nearly 3,700 international stores, with locations in the United Kingdom, Mexico, Thailand and Ireland.
The Walgreens buyout comes after competitor Rite Aid emerged last September as a private company from a Chapter 11 bankruptcy reorganization. Remaining publicly traded drugstore operators include the nation’s largest, CVS Health Corp., and retailers like Walmart and the grocer Kroger that run pharmacies at many of their locations.
Sponsor Message
Become an NPR sponsor
