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Drugstore chain Walgreens Boots Alliance announced it will be private on Thursday.
The struggling company has signed a deal with Sycamore Partners, a private equity company worth $10 billion. Sycamore paid $11.45 per share, with a premium of $10.60 on Thursday at 8%. The company's shares rose nearly 6% in expanded transactions.
Walgreens shareholders can also receive an additional $3 in cash from the company's debt and future monetization of the stock at Villagemd.
Walgreens can “actively” reduce costs when owned by private ownership, analysts say
The struggling company has signed a deal with Sycamore Partners, a private equity company worth $10 billion. (Leonardo Munoz / Viewpress / Getty Images)
The company's market value has shrunk from nearly $100 billion a decade ago to over $9 billion, with drug price margins falling, and consumers shifting to cheaper rivals between Amazon and Walmart to fill prescriptions and purchasing toiletries.
And when rivals diversified into insurance or prescription management, Walgreens invested billions of billions to buy other pharmacy chains despite trends away from in-store shopping.
As a result, the second-largest US pharmacy chain's debt and lease obligations have swelled to nearly $30 billion.
Walgreens shareholders may also receive an additional $3 in cash from future monetization of the company's debts and stock profits at Villagemd. (Luke Sharrett/Bloomberg via Getty Images)
“As a private company, WBA [Walgreens Boots Alliance] CFRA research analyst Paige Meyer told Fox Business in December that CFRA research analyst Paige Meyer made major changes to the business, and in our view, we are more flexible and willing to actively cut costs to tackle recent challenges in pharmacy sales margins.
Why nearby pharmacies are closed
In October, the company, struggling to compete with rivals like Amazon, announced plans to close at least 1,200 stores over the next three years. The move is part of an effort to address these challenges and close “slight” numbers of unperforming locations across the United States.
In October, the company, struggling to compete with rivals like Amazon, announced plans to close at least 1,200 stores over the next three years. (istock / istock)
Sycamore Partners, a private equity firm specializing in retail and consumer investment, has a track record of acquiring distressed retailers for profit. Among them were brands such as Staple, Talbot and Nine West.
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Daniella Genovese and Reuters of Fox Business contributed to this report.
