Walgreens to Go Private in $10B Deal with Sycamore Partners
Walgreens Boots Alliance has agreed to be acquired by private equity Sycamore Partners, a private equity firm, in a deal valued at $10 billion. The acquisition follows months of negotiations that began gaining attention in December 2024. The deal will take Walgreens off the public market, potentially providing the company with the flexibility to address its ongoing financial struggles.
Under the terms of the agreement, Walgreens shareholders will receive $11.45 per share in cash. This payment represents a 29% premium over the stock’s closing price on December 9, which was the last trading day before rumors of the potential sale surfaced. In addition, shareholders could receive up to $3 more per share if the company’s healthcare businesses—such as VillageMD, Summit Health, and CityMD—are sold in the future. This potential extra payment could increase the total value of the deal to as much as $23.7 billion, according to Walgreens.
Walgreens, like many pharmacy chains, has been navigating significant challenges stemming from shifting consumer habits and a complicated healthcare market. In June 2024, the company unveiled plans to close approximately 2,150 of its 8,600 U.S. stores over the next three years as part of its response to these pressures. Despite these struggles, Walgreens reported a positive development on January 30: its fiscal first-quarter sales rose by 7.5% to $39.5 billion compared to the same period in the previous year.
However, the costs tied to store closures resulted in a net loss of $0.31 per share. Notably, this marks an improvement from the $0.80 per share loss recorded in the prior year’s quarter, reflecting a reduction in per-share losses despite the ongoing financial strain.
The acquisition reflects broader trends in retail and healthcare, where traditional players like Walgreens are struggling to adapt to e-commerce competition and shifting consumer habits. For Sycamore Partners, known for investing in distressed retail assets, this deal represents an opportunity to reshape a major chain and extract value from its parts.
Walgreens Boots Alliance CEO Tim Wentworth, in announcing the company’s acquisition by Sycamore Partners, noted that although progress is being made on the company’s turnaround efforts, generating significant value will require time and is best achieved under private ownership.
Since its founding in 2011, New York-based private equity firm Sycamore Partners has raised approximately $10 billion in capital. The firm’s current portfolio includes retail chains such as Staples, Lane Bryant, and The Limited. Additionally, Sycamore has achieved successful exits from investments in brands like Express and Aeropostale.
The transaction is expected to close in the fourth quarter. The deal includes a 35-day “go-shop” period, during which Walgreens can solicit alternative proposals.
Stefano Pessina, the company’s executive chairman who owns approximately 17% of WBA shares, will reinvest his proceeds and maintain a significant equity stake in the new ownership structure.
Centerview Partners is acting as financial advisor, Kirkland & Ellis LLP is acting as legal advisor and Ropes & Gray LLP is acting as healthcare regulatory counsel to WBA. Morgan Stanley & Co. LLC was also a financial advisor, and provided a fairness opinion to the WBA Board of Directors.
UBS Investment Bank is acting as lead financial advisor, Goldman Sachs and J.P. Morgan are acting as co-lead financial advisors, Citi and Wells Fargo are acting as financial advisors, Davis, Polk & Wardwell LLP is acting as legal counsel and Bass Berry & Sims PLC is acting as healthcare regulatory counsel to Sycamore Partners.
Debevoise & Plimpton LLP is acting as legal advisor to Stefano Pessina.
