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.
I don’t doubt 1/3 of Walgreens could close. And Rite Aid and CVS, too. There’s the ghetto problem, and then these chains just built too many stores too close to each others. And those great looking new Publix supermarkets with pharmacies are popping up in most all the same towns as those other three in many areas.
“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.”
and not just pharmacy, but non-prescription medical supplies of all kinds: amazon carries high-end brand name ER bandaging supplies that none of the retail pharmacy stores bother to carry, and in bulk quantity at that ... except for the random box of band-aides, peroxide and isopropyl alcohol, i don’t bother to shop any were except amazon for bandaging ...
“Both failing strategies.”
and both promoted by totally clueless management ... Theranos, for example, had scam written all over it ... apparently due diligence is beyond the comprehension of the latest generation of ignorant and clueless management ...
CVS owns it now. Stock is up.
“Walgreen’s is an overpriced Dollar Store that sells drugs in the back.”
one of the best descriptions of walgreens i’ve ever heard!
heck, at least with walmart, the pharmacy is right up front!
No publix where I live. We have Kroger. I still think there is a place for local drug stores, but like you said, Walgreens is overbuilt for current times and thanks to democrats pro-thug policies...many are going to close in those areas.
San Francisco has lost most of theirs as stealing isn’t prosecuted.
I’ll tell you the problem with Walgreens: Every item is at least double in price what it is elsewhere, and sometimes triple.
I dropped them when they would not refill a prescription for out of country travel. Very difficult to deal with and negatively affected my health.
CVS gained great adantage over Walgreens with its virtical integration of the top PBM (prescription benefit manager - CVS Caremark), medical care insurer AETNA, and the CVS retail prescription drug business.
The Walgreens in the small town where I work has a super Walmart and a super Target, both with pharmacies, a quarter mile in either direction from it.
The Walgreens parking lot usually has plenty of cars in it, so it will be interesting to see what happens to the store here. I never go in there so it won’t directly affect me.
The 80’s are back!
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