Walgreens reportedly in talks to sell itself to Sycamore Partners
Walgreens Boots Alliance is reportedly in discussions to sell itself to a private equity firm.
The retail pharmacy and health care services company is in talks with Sycamore Partners in a deal that would take it private, reported Reuters, which noted that the Wall Street Journal first reported the news. Walgreens had been working with its advisers during the past few weeks and had also reached out to other potential buyers, but is currently in talks with only Sycamore, the report said.
If the talks prove successful, it would be Sycamore's biggest deal as Walgreens has a nearly $8 billion valuation. The company also had long-term debt of $8.04 billion, as of Aug. 31, Reuters said.
If an agreement is reached, the deal could be done early next year, the Journal reported, and Sycamore would then probably sell parts of the drug store chain or collaborate with partners.
Walgreens has been challenged by weak consumer spending, low reimbursement rates for filing prescriptions and increased online competition. The company been working to cut costs and improve its profitability under Tom Wentworth, who took the reins as CEO in October 2023 following the abrupt departure of Rosalind Brewer after less than three years on the job.
In October 2024, it said it planned to close 1,200 U.S. stores by the end of fiscal 2027, including 500 by the end of fiscal 2025 as part of a $1 billion cost-cutting plan.
Walgreens previously attempted to go private in 2019 when it was valued at more than $55 billion but was unsuccessful. Private equity group KKR had also approached the drugstore chain with a buyout proposal at the time, according to media reports.
Neil Saunders, managing director of the analytics firm GlobalData, said in emailed commentary as reported by Marketwatch that a sale to private equity would be a way for Walgreens to offer some value to shareholders.
"However, the scale of the task should not be underestimated,” Saunders said. “Walgreens is a big company with big problems, and this would be a longer-term investment rather than a way to make a quick buck. Cuts would most certainly be on the agenda, but the pathway to grow would be more challenging as the healthcare, pharmacy and retail sides of the business all have inherent problems that are not easily soluble."
