An impending $10 billion take-private of Walgreens would cap an epic fall from grace
Shares of the struggling drugstore chain rose on reports that the company could seal a private equity buyout within days.
Walgreens shares popped 6.5% Tuesday following reports that the struggling pharmacy chain is close to a deal to go private with Sycamore Partners. According to The Wall Street Journal, the private equity giant could finalize the agreement as soon as Thursday, valuing the company at about $10 billion. Deal talks have been ongoing for months.
It’s been a long fall from grace for Walgreens, which was worth over $100 billion at its peak in 2015. The company’s market value has cratered since then, now sitting at about $9.4 billion as traders bid up the stock on hopes of a deal.
Like other drugstore chains, Walgreens has been hit hard by competition from Amazon and shrinking prescription reimbursement rates. Last October, the company said it would close 1,200 unprofitable stores across the US. Rival CVS has also been in cost-cutting mode, laying off thousands of employees while navigating what it called “continued disruption, regulatory pressures, and evolving customer needs.”
Walgreens is also still dealing with legal troubles. In January, shares tanked after the Justice Department sued the company, alleging it contributed to the opioid crisis by improperly dispensing millions of pills. Walgreens stock is still down nearly 10% over the past year.
If the deal goes through, it would be a departure from Sycamore’s usual playbook. The firm is best known for snapping up retailers like Express, Hot Topic, and Staples.
