Walgreens shares soared 20% on Tuesday after reports the pharmacy giant was in talks to go private, but at a fraction of the price the company's stock cost less than a decade ago. It was.
Walgreens Boots Alliance and Sycamore Partners, the buyout firm that previously acquired Staples, Talbots and Aeropostale, are in talks on a deal that could close early next year unless negotiations break down. It was reported. wall street journal.
Since peaking at more than $100 billion in 2015, Walgreens' market value has fallen to about $7.5 billion. The company's stock price has fallen 90% over the same period, and about 65% this year alone.
The deal is a big win for Sycamore, which will likely sell some of its Walgreens business or work with a partner, people told the Journal.
Walgreens, a more than 120-year-old company with more than 12,000 stores in the U.S., Latin America and Europe, according to its website, has long been attracting attention as a potential private equity takeover. It seems unthinkable given the scale. limit.
Buyout giant KKR reportedly offered the pharmacy giant $70 billion in 2019, when the company's market size exceeded $50 billion.
Walgreens' problems began in 2012, when Walgreens paid more than $6 billion for about half of Alliance Boots, which owns Boots pharmacies in the UK. Walgreens completed its merger in 2015, but financial stress has left Walgreens exploring the possibility of selling the UK pharmacy chain.
The chain also struggles with increasing competition from Walmart and Amazon, as well as prescription drug inventory margins. That's not all. Rival CVS' stock is down 32% so far this year.
While CVS has expanded its business, including acquiring insurance company Aetna in 2018, Walgreens has remained primarily in the pharmacy field.
Walgreens CEO Tim Wentworth has been trying to turn around the company since taking over in October 2023, the week before pharmacy staff resigned in protest over staff shortages. As a result, it was a tough start.
Under Wentworth, Walgreens announced over the summer that it would close unprofitable stores and reduce its stake in Village MD in an effort to pull back on its push into primary care.
One of Sycamore's last big deals was the nearly $7 billion acquisition of Staples in 2017. The company has also reportedly expressed interest in acquiring Kohl's in 2022.
The company's current investments include Belk, Hot Topic, Talbots, Aeropostale, and Stuart Weitzman.
