new York
Cnn
–
Walgreens Boots Alliance is being privileged in an agreement worth $ 23.7 billion, following a largely disastrous race on public procurement where its market capitalization has lost billions and more than 10% of its locations closed.
It ends almost 100 years as a listed company. After opening his 100th store in Chicago, Walgreens became a public the following year in 1927.
The Sycamore Partners’ investment company agreed to pay $ 11.45 per cash share, according to a Walgreens press release. Including debt and other potential future payments, the company said that the total value of the agreement could reach up to $ 23.7 billion.
The actions of Walgreens (WBA) have lost almost 80% of their value in the past five years, but went up in recent months after information that the company was in talks to become private.
Sycamore specializes in consumption and retail services, and the company said it would continue to operate under its portfolio of brands outside the Chicago region.
“While we are progressing in relation to our ambitious recovery strategy, the creation of significant value will take time, concentration and change that is better managed as a private company,” WBA CEO, Tim Wentworth said on Thursday. “Sycamore will provide us with the expertise and experience of a partner with solid history of successful retail reversals.”
Similar to Rivals CVS and Rite AID, Walgreens has closed hundreds of stores and has struggled to reduce prescription reimbursements in recent years, sending its value to only $ 9.5 billion against $ 100 billion decade ago.
Walgreens slipped behind CVS because it is smaller than CVS, which gives it less scale to negotiate prices with insurers and other health care entities that mostly pay people that people take.
Last October, Walgreens announced that it closed approximately 1,200 locations. About one in seven Walgreens, currently open, will close by 2027. It currently has around 8,500 locations across the United States.
These closures represent a significant escalation from June 2024, when the company announced that it closed 300 underperforming locations as part of a multi-year optimization program of the CEO Tim Wentworth. At the time, the company said that around a quarter of Walgreens stores were not profitable and that the chain promised “imminent” changes.
Walgreens resumed the New York Duane Read-based pharmacy chain in 2010. In 2014, it bought the remaining participation of 55% in European Boots of the Alliance Pharmacy Operator for $ 5.3 billion in cash, keeping its business offices in the United States.
Stefano Pessina, the executive president of the company, remains the largest individual shareholder with a participation of 17%. As a key player in the Walgreens Alliance Boots agreement, he agreed to reinvest his participation in the company.
The sale with investment capital “would be an elegant solution to extract the value of investors,” said Neil Saunders, Managing Director of Globaldata, in a note in December. He added that Sycamore could sell British channel boots to “maximize their return”.
“Walgreens is a big company with big problems, and it would be a longer -term investment rather than a way to earn money quickly,” Saunders wrote in a note on Tuesday. “The cuts would most certainly be on the agenda, but the path of growth would be more difficult because health care, pharmacy and retail trade in the company all have inherent problems which are not easily soluble.”
Walgreens’ closings are involved in the middle of a difficult period for pharmacy chains, which are hammered on a few fronts. The channels have experienced difficulties in recent years due to the decline in prescription medication reimbursement rates and the new Amazon competition, which has led to the drop in their profits.
The front end of pharmacies, where the snacks and the household staples are sold, also faced the pressure of larger competitors, including the target. Even the growth of Dollar General has harmed the pharmacy chains in rural areas.
Walgreens Boots Alliance said it expects the transaction to end in the fourth quarter of 2025.
