Walgreens Reportedly in Talks to Sell to Private Equity Firm Sycamore Partners

Walgreens Boots Alliance is reportedly in discussions with private equity firm Sycamore Partners about a potential sale of the company, according to a report from The Wall Street Journal. If the deal goes through, Sycamore Partners would take Walgreens private, potentially selling off parts of the company or working with partners to restructure it.

Walgreens Boots Alliance, based in Deerfield, Illinois, has been targeted by private-equity firms for several years, with KKR expressing interest in 2019 when the company’s market capitalization exceeded $56 billion. However, Walgreens’ performance has since faltered, with significant declines in its stock price. The company has faced multiple rounds of layoffs, and in October, it announced plans to close 1,200 stores over the next three years. Despite these struggles, Walgreens CEO Tim Wentworth emphasized that about 6,000 of the company’s 8,000 stores are profitable.

Sycamore Partners‘ most notable deal was the $7 billion acquisition of office supply chain Staples in 2017. If the Walgreens deal is successful, Sycamore could potentially reshape the company into a more streamlined operation, possibly selling off parts of its business, such as its Boots pharmacy chain, to maximize returns.

Analyst Neil Saunders from GlobalData Retail suggested that while Walgreens faces significant challenges, including the need for long-term investments in its healthcare, pharmacy, and retail divisions, a sale to Sycamore Partners could be an “elegant solution” to stabilize the company. The dramatic decline in Walgreens’ market capitalization has made it more affordable for Sycamore, but the decision hinges on whether there is enough value left in Walgreens to make the turnaround viable.

This potential sale comes at a time when Walgreens is working to right its ship, with closures already underway and efforts to streamline operations to improve profitability. If the deal goes through, Sycamore Partners will likely focus on restructuring Walgreens into a more efficient and focused business.