Jamie Spencer
Walgreens Boots Alliance is set to go private in a deal worth up to $23.7 billion, marking the end of nearly a century as a publicly traded company. The move follows years of financial struggles, declining market value, and widespread store closures.
Sycamore Partners Acquires Walgreens
Private equity firm Sycamore Partners has agreed to acquire Walgreens for $11.45 per share in cash. When including debt and potential future payouts, the total value of the deal could reach $23.7 billion. Walgreens’ stock, which has lost nearly 80% of its value in the past five years, saw a slight uptick in recent months following reports of privatization talks.
Sycamore, known for its investments in consumer and retail services, will continue operating Walgreens under its current brand, headquartered in Chicago.
“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,” said Walgreens CEO Tim Wentworth in a statement.
Declining Performance and Industry Challenges
Walgreens has struggled with declining prescription reimbursements, rising competition, and operational challenges. The company’s market capitalization has plummeted from $100 billion a decade ago to just $9.5 billion today.
Similar to competitors CVS and Rite Aid, Walgreens has been closing stores at an accelerated pace. In October 2024, it announced plans to shut down 1,200 locations, equating to one in seven Walgreens stores closing by 2027.
Unlike CVS, which acquired health insurer Aetna in 2018, Walgreens did not form strategic partnerships with insurers, opting instead to invest heavily in VillageMD clinics. This required significant spending on real estate, technology, and staffing, adding further financial strain.
Executive Shareholder and Potential Asset Sales
Walgreens’ executive chairman, Stefano Pessina, remains its largest individual shareholder with a 17% stake and has agreed to reinvest his shares in the company.
Analysts speculate that Sycamore may sell off the UK-based Boots chain to maximize its returns.
“Walgreens is a big company with big problems, and this would be a longer-term investment rather than a way to make a quick buck,” said Neil Saunders, managing director at GlobalData. He added that the company faces challenges across its pharmacy, healthcare, and retail segments that are not easily solvable.
Industry Pressures and Future Outlook
The pharmacy sector is undergoing significant transformation as retailers like Amazon, Target, and Dollar General expand their footprint. Walgreens has faced declining revenue as these competitors gain market share.
With this transition to private ownership, Walgreens hopes to restructure its operations and regain profitability. The transaction is expected to close in Q4 2025.
