Walgreens to Go Private in $10 Billion Deal with Sycamore Partners

Walgreens to Go Private in $10 Billion Deal with Sycamore Partners

Walgreens, the struggling drugstore chain, has agreed to be taken private by private equity firm Sycamore Partners in a deal valued at around $10 billion. The company will receive $11.45 per share in cash, representing an 8% premium to its closing price on Thursday. Shareholders could also receive up to $3 more per share in the future from the sale of Walgreens’ primary-care businesses, including Village Medical, Summit Health, and CityMD.

Background

Walgreens has been struggling to regain its footing as a public company, with its market value shrinking to under $8 billion in late 2024 due to competition from its main rival CVS, grocery chains, big-box retailers, and Amazon, among other challenges. The company has been squeezed by the transition out of the Covid pandemic, pharmacy reimbursement headwinds, softer consumer spending, and a troubled push into healthcare.

Deal Details

The deal, which is expected to close in the fourth quarter of this year, values Walgreens at an equity value of around $10 billion. The company will maintain its headquarters in Chicago and currently has over 310,000 employees globally and 12,500 retail pharmacy locations across the U.S., Europe, and Latin America.

CEO’s Commentary

Walgreens CEO Tim Wentworth, who took the role in 2023, commented, "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." He added, "Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds."

What’s Next?

Walgreens will continue to operate as a private company, and its second-quarter earnings will be released on April 8. The company plans to close roughly 1,200 of its drugstores over the next three years, including 500 in fiscal 2025 alone. It has also scaled back its push into primary care by cutting its stake in provider VillageMD.

Frequently Asked Questions

Q: What is the value of the deal?
A: The deal is valued at around $10 billion in equity value.

Q: How much will shareholders receive per share?
A: Shareholders will receive $11.45 per share in cash, with the possibility of up to $3 more per share in the future from the sale of Walgreens’ primary-care businesses.

Q: When is the deal expected to close?
A: The deal is expected to close in the fourth quarter of this year.

Q: What will happen to Walgreens’ operations after the deal?
A: Walgreens will continue to operate as a private company, with its headquarters in Chicago, and will maintain its current operations, including its retail pharmacy locations and primary-care businesses.