Struggling drugstore chain Walgreens has announced that it is going private through a deal with private equity firm Sycamore Partners valued at $10 billion. Shareholders will receive $11.45 per share in cash, with potential additional payouts from the sales of Walgreens’ primary-care businesses. The total transaction value could reach up to $23.7 billion. The deal is expected to close in the fourth quarter of the year.
Walgreens’ decision to go private marks the end of its tumultuous run as a public company since 1927. With declining stock prices due to competition and various challenges, the company sees the move to private ownership as an opportunity for meaningful value creation. Sycamore Partners expressed confidence in Walgreens’ pharmacy-led model and its role in improving outcomes for patients, customers, and communities.
Despite facing tough market conditions, including the impact of the COVID-19 pandemic, Walgreens plans to maintain its headquarters in Chicago and continue its global operations. The company still intends to release its second-quarter earnings as planned.
Over the years, Walgreens has struggled against competitors such as CVS and big-box retailers, leading to a decline in market value. In response to these challenges, Walgreens has started closing unprofitable locations and scaling back its push into primary care. The company is now under new leadership with CEO Tim Wentworth leading its turnaround strategy.
The move to go private is seen as an opportunity for Walgreens to focus on its core pharmacy business and navigate the changing healthcare landscape with the support of Sycamore Partners.
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