Walgreens agrees to be acquired by personal fairness agency Sycamore Companions for practically $10 billion
Walgreens Boots Alliance says it has agreed to be acquired by personal fairness agency Sycamore Companions because the struggling retailer seems to be to show itself round after years of dropping cash.
Walgreens mentioned Thursday that Sycamore can pay $11.45 per share, giving the deal an fairness worth just below $10 billion. Shareholders might ultimately obtain as much as one other $3 per share underneath sure situations.
A buyout to take the pharmacy chain personal would give it extra flexibility to make adjustments to enhance its enterprise with out worrying about Wall Road’s response. The corporate has already been making some huge adjustments because it seeks to show round its enterprise. Walgreens has been a public firm since 1927.
Walgreens, based in 1901, has been coping with skinny prescription reimbursement, rising prices, persistent theft and inflation-sensitive customers who’re on the lookout for bargains elsewhere. Walgreens is within the early phases of a plan to shut 1,200 of its roughly 8,500 U.S. places.
The Deerfield, Illinois, firm had already shed a couple of thousand U.S. shops because it grew to almost 9,500 after shopping for some Ceremony Assist places in 2018.
The corporate additionally mentioned final August that it was reviewing a U.S. well being care operation it had expanded aggressively, and it would promote all or a part of its VillageMD clinic enterprise. That announcement got here lower than two years after the corporate mentioned it might spend billions to increase it.
Shares of Walgreens shed practically two thirds of their worth final 12 months. Walgreens mentioned the transaction value represents a virtually 30% premium to the share value in December when reviews of a deal first surfaced. Walgreens CEO Tim Wentworth confirmed in January {that a} sale course of for the enterprise was underway. Together with debt, the worth of the deal is just below $24 billion, the corporate mentioned.
Walgreens mentioned earlier this 12 months it was making progress bettering prescription reimbursement.
Walgreens has additionally taken steps to protect money. It mentioned in January that it was suspending a quarterly dividend it has supplied for greater than 90 years, and it has been decreasing its stake within the drug distributor Cencora this 12 months to get money partially to pay down debt.
In the end, the corporate has to enhance its money circulation, whether or not it stays publicly traded or goes personal, Leerink Companions analyst Michael Cherny mentioned in a Feb. 23 analysis word.
“Administration has not been shy about its push to enhance the money circulation technology profile as a part of the turnaround plan,” the analyst wrote. “With out money circulation, not one of the worth instances work.”
Walgreens Boots Alliance Inc. additionally runs practically 3,700 worldwide shops, with places in the UK, Mexico, Thailand and Eire.
The Walgreens buyout comes after competitor Ceremony Assist emerged final September as a personal firm from a Chapter 11 chapter reorganization. Remaining publicly traded drugstore operators embody the nation’s largest, CVS Well being Corp., and retailers like Walmart and the grocery store Kroger that run pharmacies at a lot of their places.
