NEW YORK (AP) — Walgreens Boots Alliance says it has agreed to be acquired by non-public fairness agency Sycamore Companions because the struggling retailer seems to be to show itself round after years of dropping cash.
Walgreens stated Thursday that Sycamore pays $11.45 per share, giving the deal an fairness worth just below $10 billion. Shareholders might ultimately obtain as much as one other $3 per share below sure situations.
A buyout to take the pharmacy chain non-public would give it extra flexibility to make adjustments to enhance its enterprise with out worrying about Wall Avenue’s response. The corporate has already been making some huge adjustments 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 consumers who’re in search of bargains elsewhere. Walgreens is in the early stages of a plan to shut 1,200 of its roughly 8,500 U.S. areas.
The Deerfield, Illinois, firm had already shed a few thousand U.S. shops because it grew to almost 9,500 after shopping for some Ceremony Support areas in 2018.
The corporate additionally stated 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 stated it would spend billions to increase it.
Shares of Walgreens shed almost two thirds of their worth final yr. Walgreens stated the transaction worth represents an almost 30% premium to the share worth in December when experiences 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 stated.
Walgreens stated earlier this yr it was making progress enhancing prescription reimbursement.
Walgreens has additionally taken steps to protect money. It stated in January that it was suspending a quarterly dividend it has provided for greater than 90 years, and it’s been reducing its stake within the drug distributor Cencora this yr to get money partially to pay down debt.
Finally, the corporate has to enhance its money stream, whether or not it stays publicly traded or goes non-public, Leerink Companions analyst Michael Cherny stated in a Feb. 23 analysis notice.
“Administration has not been shy about its push to enhance the money stream era profile as a part of the turnaround plan,” the analyst wrote. “With out money stream, not one of the worth instances work.”
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Walgreens Boots Alliance Inc. additionally runs almost 3,700 worldwide shops, with areas in the UK, Mexico, Thailand and Eire.
The Walgreens buyout comes after competitor Ceremony Support emerged final September as a non-public 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 a lot of their areas.
