Walgreens makes $10B take-private deal with Sycamore

Walgreens’s will no longer be a public company, per an exclusive Wall Street Journal report, which said Walgreens has made a deal to be taken private by Sycamore Partners in one of the biggest leveraged buyouts in recent memory. 

The report said Sycamore has agreed to pay $11.45 a share in cash for Walgreens Boots Alliance, representing an equity value of around $10 billion and 29% above where the stock was trading last year. Shareholders also could receive up to an additional $3 a share down the road, based on proceeds from selling the company’s primary-care assets, per the report. 

The report went on to say that the total value of the deal, including debt and the potential future payouts, would be almost $24 billion. The companies expect the deal to close in the fourth quarter of 2025, the report noted.

[Read more: Walgreens reportedly close to roughly $10B deal to go private]

The market value of Walgreens Boots Alliance surpassed $100 billion in 2015 but had been battered in recent years. Walgreens originally went public in 1927, the report stated. 

“Going private is going to let us be more focused, more nimble, more long-term in our decision-making, in the context of the challenges that we continue to face,” said CEO Tim Wentworth. “That gives us both the time and the ability to focus in a way to transform Walgreens,” per the report. 

Wentworth, who became CEO in October 2023, had begun a turnaround effort. The company has said it plans to shed around 1,200 stores over three years. 

Wentworth said the deal is a good one for shareholders and allows them to avoid the risk as the company works to change its trajectory, the report said. 

The Wall Street Journal first reported in mid-December that Sycamore was in talks for a deal and earlier this week reported that talks were advanced. 

The transaction would rank among the largest leveraged buyouts globally in the past decade, at a time when there have been fewer such big deals with public-company valuations and interest rates remaining elevated, the report said. 

The deal also includes a so-called go-shop period for Walgreens to solicit other potential suitors for 35 days, per the report. 

Walgreens includes its namesake Walgreens retail business in the U.S., the U.K.-based pharmacy chain Boots, the specialty pharmacy group Shields Health Solutions and the U.S. healthcare provider VillageMD. 

Centerview Partners served as Walgreens’s lead banker, and the law firm Kirkland & Ellis was the company’s legal adviser. UBS Investment Bank was the lead banker to Sycamore, with Davis, Polk & Wardwell acting as legal counsel. Morgan Stanley also advised Walgreens, and Goldman Sachs, JPMorgan, Citi and Wells Fargo also helped advise Sycamore, the report said. 

Walgreens Boots Alliance issued a press releasing confirming that it has entered into a definitive agreement to be acquired by Sycamore and that the total value of the transaction represents up to $23.7 billion. 

"WBA shareholders will receive total consideration consisting of $11.45 per share in cash at closing of the Sycamore transaction (the “Cash Consideration”) and one non-transferable right (a “Divested Asset Proceed Right” or “DAP Right”) to receive up to $3.00 in cash per WBA share (together with the Cash Consideration, the “Total Consideration”) from the future monetization of WBA’s debt and equity interests in VillageMD, which includes the Village Medical, Summit Health and CityMD businesses (such businesses, “Divested Assets”). The Cash Consideration represents a premium of 29%, and the Total Consideration represents a premium of up to 63%, to the WBA closing share price of $8.85 on December 9, 2024, the day prior to the first media reports regarding a potential transaction," per the press release. 

The press release stated, "Leveraging WBA’s healthcare expertise and Sycamore’s established leadership in retail and consumer services, WBA will be better positioned to become the first choice for pharmacy, retail and health services. The Company will continue to operate under Walgreens, Boots and its trusted portfolio of consumer brands. WBA will maintain its headquarters in the Chicago area and continue contributing to the communities in which it operates, with the goal of positively impacting the health outcomes and overall well-being of its customers, patients, communities and team members."

Wentworth stated, “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.”

Wentworth concluded, “Our trusted brands and deep commitment to our customers, patients, communities and team members have and will continue to anchor our business as we realize our goal of being the first choice for pharmacy, retail and health services. I am grateful to the more than 311,000 team members globally who are fiercely committed to WBA, our customers and patients.”

“For nearly 125 years, Walgreens, and for 175 years, Boots, along with their portfolio of trusted brands, have been integral to the lives of patients and customers. Sycamore has deep respect for WBA’s talented and dedicated team members, and we are committed to stewarding the Company’s iconic brands,” said Stefan Kaluzny, managing director of Sycamore Partners. “This transaction reflects our confidence in WBA’s pharmacy-led model and essential role in driving better outcomes for patients, customers and communities.”

The press release went on to state that the WBA board of directors, with Stefano Pessina and John Lederer recused from the deliberations and approval, has unanimously approved the proposed transaction. The transaction is expected to close in the fourth quarter calendar year 2025, subject to customary closing conditions, including approval by WBA shareholders (including a majority of votes cast by WBA shareholders unaffiliated with Pessina or Sycamore) and the receipt of required regulatory approvals. The transaction is not subject to a financing condition and Sycamore has received fully committed financing for the transaction.

Upon completion of the transaction, WBA’s common stock will no longer be listed on the Nasdaq Stock Market, and WBA will become a private company.

Debevoise & Plimpton is acting as legal advisor to Stefano Pessina.

This article has been updated.