By: Khac Phu Nguyen
Sycamore Partners is pushing ahead with its bid to take Walgreens Boots Alliance (NASDAQ:WBA) private in what could be one of the biggest shake-ups in the company's history. The private equity firm plans to split Walgreens into three standalone businessesits U.S. retail pharmacy, UK-based Boots chain, and specialty pharma unit Shields Health Solutions. Executive chairman Stefano Pessina, who owns nearly 17% of the company, is expected to maintain a significant stake post-breakup.
The deal isn't expected to hit financing roadblocks, but Walgreens' stock volatility has added complexity to negotiations. The company, once valued at over $100 billion in 2015, now sits at just $9.5 billion, battered by competitive pressures and a $9 billion net loss for its 2024 fiscal year. Walgreens recently announced plans to close 1,200 stores, a move aimed at stabilizing its struggling business. Despite an initial bump on news of the talks, shares remain down more than 60% this year, leaving investors wondering if a breakup is the best way forward.
If Sycamore pulls the trigger, it'll be a defining moment for Walgreens. The split could unlock value and allow each business to operate with its own capital structure, but execution risks remain. Previous deal talks have been on and off, and there's no guarantee this time will be different. With Walgreens at a critical juncture, the pressure is on Sycamore and Pessina to deliver a turnaroundor risk watching the retailer's decline continue.
