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 just below $10 billion. Shareholders may finally obtain as much as one other $3 per share below 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 large 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 levels of a plan to shut 1,200 of its roughly 8,500 U.S. places.
The Deerfield, Illinois, firm had already shed a few thousand U.S. shops because it grew to just about 9,500 after shopping for some Ceremony Support places 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 would promote all or a part of its VillageMD clinic enterprise. That announcement got here lower than two years after the corporate mentioned it could spend billions to increase it.
Shares of Walgreens shed practically two thirds of their worth final yr. Walgreens mentioned the transaction worth represents an almost 30% premium to the share worth in December when stories 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 just below $24 billion, the corporate mentioned.
Walgreens mentioned earlier this yr it was making progress bettering 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 partly to pay down debt.
Finally, the corporate has to enhance its money circulation, whether or not it stays publicly traded or goes personal, Leerink Companions analyst Michael Cherny mentioned in a Feb. 23 analysis word.
“Administration has not been shy about its push to enhance the money circulation technology profile as a part of the turnaround plan,” the analyst wrote. “With out money circulation, not one of the worth instances work.”
Walgreens Boots Alliance Inc. additionally runs practically 3,700 worldwide shops, with places in the UK, Mexico, Thailand and Eire.
The Walgreens buyout comes after competitor Ceremony Support emerged final September as a personal 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 places.
