An indication for Walgreens Pharmacy in Pittsburgh.
Gene J. Puskar/AP
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Gene J. Puskar/AP
NEW YORK — Walgreens Boots Alliance says it has agreed to be acquired by personal fairness agency Sycamore Companions because the struggling retailer seems to show itself round after years of shedding cash.
Walgreens mentioned Thursday that Sycamore pays $11.45 per share, giving the deal an fairness worth slightly below $10 billion. Shareholders might finally obtain as much as one other $3 per share underneath sure situations.
A buyout to take the pharmacy chain personal would give it extra flexibility to make modifications to enhance its enterprise with out worrying about Wall Road’s response. The corporate has already been making some massive modifications because it seeks to show round its enterprise. Walgreens has been a public firm since 1927.
Walgreens, based in 1901, has been coping with skinny prescription reimbursement, rising prices, persistent theft and inflation-sensitive customers who’re searching for bargains elsewhere. Walgreens is within the early phases of a plan to shut 1,200 of its roughly 8,500 U.S. areas.
The Deerfield, Illinois, firm had already shed a couple of thousand U.S. shops because it grew to almost 9,500 after shopping for some Ceremony Help areas in 2018.
The corporate additionally mentioned final August that it was reviewing a U.S. well being care operation it had expanded aggressively, and it’d promote all or a part of its VillageMD clinic enterprise. That announcement got here lower than two years after the corporate mentioned it might spend billions to develop it.
Shares of Walgreens shed almost two thirds of their worth final yr. Walgreens mentioned the transaction worth represents an almost 30% premium to the share worth in December when experiences of a deal first surfaced. Walgreens CEO Tim Wentworth confirmed in January {that a} sale course of for the enterprise was underway. Together with debt, the worth of the deal is slightly below $24 billion, the corporate mentioned.
Walgreens mentioned earlier this yr it was making progress enhancing prescription reimbursement.
Walgreens has additionally taken steps to protect money. It mentioned in January that it was suspending a quarterly dividend it has supplied for greater than 90 years, and it has been decreasing its stake within the drug distributor Cencora this yr to get money partially to pay down debt.
Finally, the corporate has to enhance its money circulate, whether or not it stays publicly traded or goes personal, Leerink Companions analyst Michael Cherny mentioned in a Feb. 23 analysis be aware.
“Administration has not been shy about its push to enhance the money circulate era profile as a part of the turnaround plan,” the analyst wrote. “With out money circulate, not one of the worth circumstances work.”
Walgreens Boots Alliance Inc. additionally runs almost 3,700 worldwide shops, with areas in the UK, Mexico, Thailand and Eire.
The Walgreens buyout comes after competitor Ceremony Help emerged final September as a non-public firm from a Chapter 11 chapter reorganization. Remaining publicly traded drugstore operators embody the nation’s largest, CVS Well being Corp., and retailers like Walmart and the grocery store Kroger that run pharmacies at lots of their areas.
