Walgreens Boots Alliance to Go Private in $23.7 Billion Deal

Walgreens Boots Alliance is set to transition into a privately held entity through a deal potentially valued at $23.7 billion. This move follows a tumultuous period on the stock market where Walgreens saw a significant dip in market capitalization and shut down more than 10% of its locations.

The decision marks the end of nearly a century of being publicly traded since Walgreens opened its 100th store in Chicago and went public in 1927. In this transaction, private equity firm Sycamore Partners will pay $11.45 per share in cash, as per Walgreens’ statement. The overall deal, accounting for debt and other possible payouts, may reach up to $23.7 billion.

Walgreens’ shares have plummeted by almost 80% over the past five years. However, there’s been a recent uptick, fueled by reports that the company was planning to go private.

Recognized for its expertise in the consumer and retail sector, Sycamore Partners intends to maintain operations via its portfolio of brands within the Chicago area.

“While our progress on the ambitious turnaround strategy is evident, actual value creation necessitates time, focused efforts, and transformative changes, which are more effectively managed as a private company,” said WBA CEO Tim Wentworth in a Thursday statement. “Sycamore will lend us the seasoned expertise and successful track record of retail turnarounds.”

Like its competitors CVS and Rite Aid, Walgreens has been shuttering multiple stores and is grappling with reduced prescription reimbursements in recent years, dragging its valuation down to somewhere around $9.5 billion, a steep drop from $100 billion a decade ago.

Walgreens has been overshadowed by CVS due to its smaller size, which has left it with less bargaining power to set prices with insurers and other healthcare payers who cover the majority of prescription costs.

In October, Walgreens announced plans to close approximately 1,200 stores, meaning one in seven currently operating will shutter by 2027. The chain currently has around 8,500 locations across the U.S.

These closures mark a significant escalation since June 2024 when Walgreens announced the closure of 300 underperforming locations as part of a prolonged optimization strategy under CEO Tim Wentworth. At that time, a quarter of Walgreens stores were deemed unprofitable, and the chain promised “imminent” changes.

Walgreens integrated New York-based Duane Reade in 2010, and in 2014, acquired the remaining 55% stake in European operator Alliance Boots for $5.3 billion in cash while retaining its U.S. corporate headquarters.

Stefano Pessina, the executive chairman of Walgreens and key player in the Walgreens Alliance Boots acquisition, holds a major 17% stake and plans to reinvest his stake in the company.

Neil Saunders, GlobalData’s managing director, noted that selling to private equity “offers an elegant solution for extracting value for investors.” He mentioned that Sycamore might offload the UK chain Boots to “maximize returns.”

“Considering Walgreens’ considerable size and challenges, this would be a long-term investment rather than a quick profit scenario,” Saunders elaborated. “Cuts would be on the agenda, but growing the business, given the inherent problems in healthcare, pharmacy, and retail, would be more complex.”

Amid tough times for drugstore chains, Walgreens’ closures come as the sector faces multiple challenges. Declining prescription drug reimbursement rates and competition from Amazon have squeezed profits.

Unlike its peers, “Walgreens hasn’t aligned strategically with a payer, which might have bridged its pharmacy and healthcare arms,” commented Tyler Giesting, West Monroe’s Healthcare M&A Director. Unlike Walgreens, CVS acquired the health insurer Aetna in 2018.

Walgreens chose acquisitions like VillageMD clinics, demanding significant investments in real estate, technology, and skilled labor,” explained Giesting. “I anticipate strong interest in Walgreens’ healthcare assets, given the industry’s shift towards value-based care and cost management.”

The company’s front-of-store areas, selling snacks and household items, also face stiff competition from major retailers like Target and the expanding Dollar General in rural areas.

Walgreens Boots Alliance announced its expectation to finalize this transaction by the fourth quarter of 2025.