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.
That sucking sound? That’s the sound of assets and capital rapidly leaving the organization.
When I see a venture capital company take a company like Walgreens private I can’t help but wonder if Walgreens will be raped and pillaged, stores will be closed, real estate will get sold off, and the profits will be squeezed out and eventually the entire thing will be gone.
They have so many locations in FL it’s ridiculous. Most of them are half empty w/ no helpful staff anywhere to be found.
I don’t wonder, I expect.
Walgreens is leaving the ghetto.
Private equity will not keep stores where violence, theft or liability is a problem - or stores that simply lose money - and the overlap of the two categories is nearly 100%. They will all be closed within months.
Give it 12 months for politicians in Chicago, Oakland, Los Angeles, etc... to start complaining about “pharmacy deserts.”
That is exactly what will happen.
Venture Capitalists?
Corporate Raiders...................
Pharmacy chains have been dropping like flies. Walgreen bought them all up. Since Grocery stores and mass merchandisers all stated adding pharmacies the stand alone pharmacies have been failing, Most likely Walgreens are looking at bankruptcy and this was a way out for the current management
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.
The major value of public trading is liquidity. Subject to rumors and manipulation. Maybe this directs to more long term investment and stability?
not sure the process to enter into this type of investment but did here about one Christian Invesment yesterday that sounded interesting.
https://www.faithdriveninvestor.org/private-equity
https://www.faithdriveninvestor.org/foundation-groups
Here is a way to explore the concept.
Everything has pros and cons. There is a lot I like about this.
i wish Sycamore Partners could luck if their intent is keep Walgreens/Boots as a going concern ...
at a minimum, they’ll have to do the following:
1. close all grossly unprofitable stores ASAP
2. reduce prices of retail merchandise to match the prices of walmart ... their current full retail prices are ridiculous
3. improve pharmacy service to match kroger ... [decades ago, i bailed on having anything to do with walgreens pharmacy services: ridiculously expensive, inaccurate, unhelpful and surly personnel ... my own personal motto for walgreens is: “If we can F it up, we will!”
As the CEO himself admitted a month ago locking down items, which you don’t see anywhere else outside major crime zones, has hurt more than helped. They are a good FedEx drop off but I have quit buying anything that needs to be cut off the shelf.
“When I see a venture capital company take a company like Walgreens private I can’t help but wonder if Walgreens will be raped and pillaged, stores will be closed, real estate will get sold off, and the profits will be squeezed out and eventually the entire thing will be gone.”
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That’s absurd. Why would the VC buy it then? Even if they did, Walgreens doesn’t supply a service or product that one can’t easily get somewhere else.
Calling Gordon Grekko, your chopping block is now available
“This is an interesting trend. It means less stock value in the public market place and money chasing fewer stocks, thus driving the public market up in general.”
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Sorry, but $10 billion is 1/300th the value of Nvidia alone, much less of the entire stock market.
This will have no effect whatsoever on the value of the rest of the stock market.
Have you read up on Sears and Red Lobster, both were taken over by Venture Capitalists, both were raped and pillaged.
In Red Lobsters case, the venture capitalists figured out the real estate was more valuable than the restaurant chain, the closed it all down, sold off the real estate and reaped huge profits. This is one common way Venture Capitalists rape and pillage a company, they sell of the assets to pay themselves huge bonuses and leave the company broke and bankrupt.
Often venture capitalist use the assets of the company to borrow against in order to take the company over, initiate extreme cost cutting measures pump and dump the stock, reap the profits and leave company loaded up with debts and bankrupt.
Not all Venture Capitalists engage in this type of behavior but a lot of them do, and I would not be surprised if Walgreens becomes a passing memory in a couple of years with the remaining assets sold off to a competitor.
Sorry, but $10 billion is 1/300th the value of Nvidia alone, much less of the entire stock market.
This will have no effect whatsoever on the value of the rest of the stock market.
All that is left in stocks is mostly large companies. It is obvious the stock market is chasing fewer companies between bankruptcies and private investment. New companys are looking strongly at private investment for a variety of reasons.
Around here we have Kroger Express inside Walgreen’s. I don’t think it’s good branding for Kroger because the prices for groceries are quite a bit higher than in regular Kroger.
We also have Target Pharmacy by CVS. The pharmacy is inside regular Target but it’s run by CVS.
“a partner with a strong track record of successful retail turnarounds”
Retail?
Walgreen’s is an overpriced Dollar Store that sells drugs in the back. That bricks-and-mortar model doesn’t work anymore in that segment. Most “Seniors” today are at least a bit tech savvy, so online is the way to go. Plans offer e-delivery of 90 supplies. Medicaid Mills don’t pay enough to stay in business. Poor folks paying cash don’t buy enough, cuz they can’t afford it.
Most locations are probably leased.
There really aren’t any assets to speak of.
I don’t see the value play.
Probably why I don’t work for Sycamore.
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