Posted on 03/07/2025 9:07:59 AM PST by JSM_Liberty
Struggling drugstore chain Walgreens is going private.
The company on Thursday said it inked a deal with private equity firm Sycamore Partners that will take it off the public market for an equity value of around $10 billion.
Sycamore will pay $11.45 per share in cash for Walgreens, representing a roughly 8% premium to the stock’s closing price on Thursday. Shareholders could also receive up to $3 more per share in the future from sales of Walgreens’ primary-care businesses, including Village Medical, Summit Health and CityMD.
Walgreens said the total value of the transaction would be up to $23.7 billion when including debt and possible payouts down the line.
Walgreens and Sycamore expect to close the take-private deal in the fourth quarter of this year. Shares of Walgreens jumped more than 5% in after-hours trading on Thursday before being halted.
The historic deal ends Walgreens’ tumultuous run as a public company, which began in 1927. As of Thursday morning, shares of the company were up more than 15% for 2025, but the stock was still down more than 48% for the last year and had fallen 70% for the past three years.
“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,” Walgreens CEO Tim Wentworth, who stepped into the role in 2023, said in a release on Thursday. “Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds.
Stefan Kaluzny, Sycamore’s managing director, said in the release the transaction reflects the firm’s confidence in Walgreens’ “pharmacy-led model and essential role in driving better outcomes for patients, customers and communities.”
Walgreens will maintain its headquarters in Chicago. The company currently has more than 310,000 employees globally and 12,500 retail pharmacy locations across the U.S., Europe and Latin America, according to the release. Walgreens still plans to release its second-quarter earnings on April 8.
Walgreens’s market value reached a peak of more than $100 billion in 2015 as investors gained confidence in its health-care business and expansion plans, making it one of the most prominent American retail companies.
But the company’s market cap shrank to under $8 billion in late 2024 due to competition from its main rival CVS, grocery chains, big-box retailers and Amazon
, along with a slew of challenges. Walgreens has been squeezed by the transition out of the Covid pandemic, pharmacy reimbursement headwinds, softer consumer spending and a troubled push into health care.
Both Walgreens and CVS have pivoted from years of store expansions to shuttering hundreds of retail pharmacy locations across the U.S. to shore up profits. But unlike CVS, which has diversified its business model by offering insurance and pharmacy benefits, Walgreens largely doubled down on its now-flailing retail pharmacy business.
In October, Walgreens said it plans to close roughly 1,200 of its drugstores over the next three years, including 500 in fiscal 2025 alone. Walgreens has around 8,700 locations in the U.S., a quarter of which it says are unprofitable. The company has also scaled back its push into primary care by cutting its stake in provider VillageMD.
Walgreens tapped health-care industry veteran Tim Wentworth as its new CEO in late 2023 to help regain its footing.
The company has reportedly been seen as a potential private equity target in the past.
In 2019, private equity firm KKR made a roughly $70 billion buyout offer to Walgreens, the Financial Times and Bloomberg reported at the time.
My daughter worked at Walgreens a few years back when the stock price was near 70 and a manager she despised used to brag about her 401K “all in Walgreens stock!” which Shaniqua insisted would soon be over 100. I think she might be cutting down on her hair weave expenses around now.
Interesting. I did not know they are combining forces. Normally what I see here is the chain runs their own pharmacies.
Of course, to be honest, I don’t do a whole lot of shopping and my health insurance send me my meds from their pharmacy by mail
Walgreens has the worst customer service treatment in the Country and highest prices.
Walgreens has been closing stores left and right already. Too much competition.
Not the least of which is government regulation. Paperwork as a public company is non-trivial.
Not the least of which is government regulation. Paperwork as a public company is non-trivial.
He was private investment.
Part of MAGA might be the wild west......................
Not all Venture Capitalists engage in this type of behavior
https://theexpositor.tv/blog/sheep-wolves-and-sheepdogs-lt-col-dave-grossman/
I was about post a comment making that same point.
With so many different types of businesses already offering pharmacy, I don't see how Walgreen's, CVS and Rite Aid can remain profitable. Their stores aren't Walmart size, but they are large stores where the pharmacy takes up a small amount of floor space and the rest of the store offers merchandise available at significantly lower prices at Walmart and other retailers.
Doesn't look like a good business model to me, and even less so with Amazon and others making serious efforts to grab a slice of the future pharmacy pie.
Yes and not being a pubic entity will make it easier to close out non profitable stores and concentrate on more lucrative locations without being sued by stock holders more interested in DEI than profit...
Expect them to leave California and New York except for richer areas.
Fully expect Walgreens to abandon those areas. They already have mostly left San Francisco...
Part of MAGA might be the wild west......................
The same was true of Sears-KMart. Expect it to happen some with Walgreens. I figure they will close 1/3 of their stores in the next 3 years. Every location in ghetto and other non-performing areas will be closed and the property sold.
If your city, or state allows uncontrolled stealing, expect Walgreens to close. They will then be a leaner, meaner, more profitable venture that can then be spun off or sold.
That’s because Target sold their pharmacy’s to CVS a few years ago.
Well, many people like myself use Walgreens for prescriptions cause they are closer than driving 10 miles to a Wal Mart.
Yes the stuff there is higher but they have sales too. Many times I just want an item or two and I don’t mind paying a little more NOT to go to Wal Mart. It was never meant to be a grocery store any more than the gas station stores which are even higher.
Walgreens never recovered from their fast expansion on every corner and the Theranos deal. Both failing strategies.
“Have you read up on Sears and Red Lobster, both were taken over by Venture Capitalists, both were raped and pillaged.”
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I am more than familiar with both. Red Lobster was stagnant, overpriced, and became a victim of the Covid hoax.
Sears couldn’t compete against Amazon, Walmart, or even all the auto parts stores. They were once everything to everybody, but toward the end they were nothing to nobody.
They weren’t raped and pillaged. They slowly self-asphyxiated.
Call it what you want, IMO, the people who took over those two companies were more about sucking out the assets than managing the company to achieve some type of turn around.
IMO, both companies were sucked dry of their assets by what should be called Vulture Capitalists, i.e. they were raped and pillaged.
Each of those three towns had a Walgreens, CVS and a Rite Aid almost within sight of each other for several years. In each, the Rite Aid closed during the last three or so years. I think that's another problem. In competing with each other, those three just opened too many locations, especially in medium sized towns, and some were bound to fail. And there are still many locally owned pharmacies in smaller cities and towns. And Publix supermarket/pharmacy stores have opened in two of those three towns. More and more competition in the pharmacy business.
Walgreens is where we have our prescriptions filled since WalMart stopped doing so.. Same distance , Walgreens is across the street from WalMart .
I wrote in another post, I expect fully 1/3 of Walgreens stores to close. Any ghetto and under performng stores will close and they will concentrate in more profitable areas of the country.
Perhaps 1/2 as many stores when they are done.
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