Walgreens stock climbs on Sycamore Partners deal report

Actions of Walgreens jumped about 20% Tuesday following a report that the company is in talks to sell itself to private equity firm Sycamore Partners.

Walgreens and Sycamore have discussed a deal that could close early next year, The Wall Street Journal reported, citing people familiar with the matter. New York-based Sycamore would likely sell parts of Walgreens’ business or work with partners, the Journal reported.

A Walgreens spokesperson declined to comment on the reported talks.

The report comes during a difficult time for the retail pharmacy giant. The company’s shares were down more than 60% for the year before their rise Tuesday.

Walgreens – crushed by the transition out of the Covid pandemic, a management shake-up, pharmacy reimbursement headwinds and its shaky progress in health care – underperformed Wall’s profit expectations Street for two consecutive quarters. Walgreens’ pharmacy business, in particular, is struggling due to declining reimbursement rates for prescription drugs and several factors putting pressure on the storefront, such as inflation and increased competition.

The company is trying to regain its footing with a new CEO, healthcare industry veteran Tim Wentworth. Since taking office in October 2023, Wentworth has moved to cut costs at Walgreens.

In October, Walgreens announced plans to close about 1,200 of its pharmacies over the next three years, including 500 in fiscal 2025 alone. Walgreens has about 8,700 locations in the United States, a quarter of which are unprofitable , according to her. The company also reduced its presence in the primary care sector by reducing its stake in primary care provider VillageMD.

Walgreens has reportedly been seen in the past as a potential private equity target.

In 2019, private equity firm KKR made a buyout offer of around $70 billion to the company, the Financial Times and Bloomberg reported at the time.