Walgreens to Go Private in Deal with Sycamore Partners

March 31, 2025

Walgreens' Transition to Private Ownership

Walgreens has entered into a definitive agreement to be acquired by private equity firm Sycamore Partners, as the struggling retail and pharmacy chain announced recently. The acquisition will see Walgreens leave the public markets. Sycamore Partners has agreed to pay $11.45 per share in cash, valuing Walgreens at approximately $10 billion. Shareholders might also receive an additional $3 per share from a potential sale of the primary care chain VillageMD.

Potential for Competing Bids

The deal, which includes debt and potential payouts, could total nearly $24 billion. Walgreens has a 35-day window to consider other proposals, although analysts from Leerink Partners suggest that due to the complexity and scale of the deal, competing bids may not succeed.

Challenges and Strategic Shifts

The move comes amid months of speculation about Walgreens' future as a public company. Analysts Charles Rhyee and Lucas Romanski from TD Cowen note that significant changes to its core retail pharmacy business, deemed necessary, would be difficult to implement while public. Walgreens' stock price has notably declined over the past decade due to reduced prescription reimbursements and increased retail competition. In the first quarter, Walgreens reported a $245 million operating loss, a stark increase from the $39 million loss in the prior year.

Turnaround Initiatives

Efforts to revitalize the business are underway. Walgreens announced plans to cut costs and reduce its store footprint, including closing about 1,200 stores over three years. CEO Tim Wentworth stated that becoming private would allow a more focused approach to its ambitious turnaround strategy, with the expertise and support from Sycamore Partners expected to be beneficial.

Re-evaluating Health Services and Financial Performance

Walgreens has reconsidered its pivot toward health services, previously mulling over a sale of its primary care chain, VillageMD. The company's U.S. Healthcare segment posted a $325 million operating loss in the first quarter despite improvements in VillageMD and Shields Health Solutions. Walgreens plans to disclose its second-quarter financial results on April 8.

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