Walgreens Boots Alliance to be bought by PE firm Sycamore in $10bn deal

(Sharecast News) - Walgreens Boots Alliance has agreed to be bought by private equity firm Sycamore Partners in a $10bn deal. In a statement on Thursday, Walgreens - the US owner of the Boots chemist chain in the UK - said Sycamore will pay $11.45 per share in cash.

Shareholders could also receive an additional $3 per share in cash from the future monetization of Walgreens' debt and equity interests in VillageMD, which includes the Village Medical, Summit Health and CityMD businesses.

Tim Wentworth, chief executive of Walgreens Boots Alliance, said: "Throughout our history, Walgreens Boots Alliance has played a critical role in the retail healthcare ecosystem. We are focused on making healthcare delivery more effective, convenient and affordable as we navigate the challenges of a rapidly evolving pharmacy industry and an increasingly complex and competitive retail landscape.

"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. Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds.

"The WBA board considered all these factors in evaluating this transaction, and we believe this agreement provides shareholders premium cash value, with the ability to benefit from additional value creation going forward from monetization of the VillageMD businesses."

The deal is expected to complete in the fourth quarter of this year.

Russ Mould, investment director at AJ Bell, said: "The worst kept secret in the business world has finally gone public. Walgreens Boots Alliance is being taken over by private equity group Sycamore, bringing an end to a turbulent time on the stock market.

"Shares in Walgreens crashed by approximately 80% in value between 2022 and 2024 as the company's struggles mounted up. The retail chain has battled with growing competition from online operators and low prescription drug reimbursement rates hurting its pharmacy operations.

"An attempt to sell the Boots UK operations didn't go to plan as reports suggest Walgreens couldn't get the desired valuation, so it gave the business a bit more attention in an effort to improve efficiencies, cut costs and put it in a better shape for the future.

"Sycamore is unlikely to keep Boots once the takeover completes. The logical route is to first find a buyer and if that doesn't work, it might float the business on a stock market.

"The London Stock Exchange might be on a charm offensive in support of an IPO, but Sycamore will care more about making money now rather than later. Therefore, a trade sale or offloading it to another private equity company looks more plausible as a first step.

"Boots is a well-loved brand and could attract a lot of attention if it did list on the UK stock market. However, the retail sector faces considerable headwinds from higher employment costs and a potential dip in consumer confidence. Therefore, it might be better to wait until the outlook improves before pursuing a listing, should Sycamore go down the IPO demerger route."