Walgreens Reportedly Working On Take-Private Sale To Sycamore Partners

Walgreens appears to have found a buyer to take it private. 

The pharmacy giant is in talks to sell itself to private equity firm Sycamore Partners in a deal that could close early next year, The Wall Street Journal reported Tuesday. 

Following the report, Walgreens shares rose 18% by the end of trading Tuesday in the highest one-day boost in company history. As a result, its market value rose from $7.5B to $9B. The chain's market value peaked at over $100B in 2015 but has been tumbling since, as pressure on its pharmacy and retail arms contributed to its shares sliding 70% this year.  

Walgreens has been struggling with slowing sales due to stiff competition and falling prescription reimbursements. The retailer dropped billions on acquisitions like its purchase of European pharmacy chain Alliance Boots for $6B in 2012. But the deal proved rocky and has contributed to Walgreens’ financial challenges, according to the WSJ. 

To course-correct, Walgreens in October announced plans to close 1,200 locations over the next three years. This was a large step up from its June announcement of 300 closures as part of a multiyear optimization plan.

Private equity firm KKR offered up $70B to buy Walgreens in 2019 when its market value was over $55B. It would have been one of the largest take-private deals in history, but it ultimately fell through. 

Walgreens operates 8,700 stores nationwide and a total of 12,000 stores across the U.S., Europe and Latin America.

Sycamore Partners, which has $10B in committed capital, is likely to sell the chain in pieces or work with partners if the deal goes through, according to the WSJ. 

The NYC-based private equity firm usually takes on smaller retail deals. In one of its latest deals, it bought acai bowl chain Playa Bowls after Pacific General's divestment in September. One of its biggest deals was acquiring Staples for $7B in 2017. Sycamore also holds investments in retailers, including clothing chains The Limited, Hot Topic and Lane Bryant.