Walgreens is going private in an up to $24 billion deal

Walgreens Boots Alliance is being taken private in a deal valued up to $23.7 billion, following a largely disastrous run on the public markets where its market cap has lost billions and more than 10% of its locations have closed. It brings an end to nearly 100 years as a publicly traded company. After opening its 100th store in Chicago, Walgreens went public the following year in 1927. Private equity firm Sycamore Partners agreed to pay $11.45 a share in cash, according to a statement from Walgreens. Including debt and other potential future payouts, the company said the full value of the deal could reach up to $23.7 billion. Walgreens’ (WBA) shares have lost nearly 80% of their value over the past five years, but have perked up in recent months following reports that the company was in talks to go private. Sycamore specializes in consumer and retail services, and the company said it would continue to operate under its portfolio of brands out of the Chicago area. “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,” WBA CEO Tim Wentworth said in a statement Thursday. “Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds.” Similar to rivals CVS and Rite Aid, Walgreens has closed hundreds of stores and struggled with declining prescription reimbursements in recent years, sending its value plummeting to just around $9.5 billion from $100 billion a decade ago. Walgreens has slipped behind CVS because it’s smaller than CVS, giving it less scale to negotiate prices with insurers and other health care entities that pay for most of the prescriptions people pick up. Last October, Walgreens announced it was closing approximately 1,200 locations. About one in seven Walgreens currently open will close its doors by 2027. It currently has around 8,500 locations across the United States. Those closures represent a significant escalation from June 2024, when the company announced it was shutting 300 underperforming locations as part of a multiyear optimization program under CEO Tim Wentworth. At the time, the company had said about a quarter of Walgreens stores were unprofitable, and the chain promised “imminent” changes. Walgreens took over New York-based drugstore chain Duane Reade in 2010. In 2014, it bought the remaining 55% stake in European drug store operator Alliance Boots for $5.3 billion in cash, keeping its corporate offices in the United States. Stefano Pessina, the company’s executive chairman, remains the biggest individual shareholder with a 17% stake. As a key player in the Walgreens Alliance Boots deal, he agreed to reinvest his stake in the company. Selling to private equity “would be an elegant solution for extracting value for investors,” Neil Saunders, managing director of GlobalData, said in a December note. He added that Sycamore could sell off UK chain Boots to “maximize their return.” “Walgreens is a big company with big problems, and this would be a longer-term investment rather than a way to make a quick buck,” Saunders wrote in a note Tuesday. “Cuts would most certainly be on the agenda, but the pathway to grow would be more challenging as the healthcare, pharmacy and retail sides of the business all have inherent problems that are not easily soluble.” Walgreens’ closures come amid a difficult time for drugstore chains, which are being hammered on a few fronts. The chains have struggled in recent years because of lower reimbursement rates for prescription drugs and new competition from Amazon, causing their profits to decline. Unlike its competitors, “Walgreens did not strategically align with a payer, which could have helped to bridge its pharmacy and healthcare segments,” consulting firm West Monroe Director of Healthcare M&A Tyler Giesting said to CNN in an email. CVS had completed its acquisition of health insurer Aetna in 2018. Instead, Walgreens poured into acquisitions like clinics VillageMD, “which required major investments in real estate, technology, and skilled labor,” Giesting said. “Now, I expect there will be strong interest in Walgreens’ healthcare assets, given the increasing focus on value-based care and cost management in the industry.” The front ends of drugstores, where snacks and household staples are sold, also face pressure from larger competitors, including Target. Even Dollar General’s growth has hurt drugstore chains in rural areas. Walgreens Boots Alliance said it expects the transaction to close in the fourth quarter of 2025.