Sycamore Partners has agreed to acquire Walgreens Boots Alliance (NASDAQ: WBA) for $11.45 per share in cash, marking a significant transition for the pharmacy giant. The offer represents an 8% premium to Walgreens’ closing price on Thursday, with shares surging 8.2% when U.S. markets opened Friday. The deal, which includes a go-shop period of 35 days, is expected to close in the fourth quarter of 2025.
The Decline of Walgreens’ Market Value
Once valued at over $90 billion a decade ago, Walgreens has faced relentless headwinds, including increased competition from online retailers and big-box stores, along with declining reimbursements from health insurers. Over the past year alone, Walgreens’ stock has lost nearly 50% of its value. The company’s financial burdens include approximately $8 billion in debt and $22 billion in lease obligations, factors that had previously led to skepticism about its ability to secure a buyer.
Private Ownership and Long-Term Strategy
Under private ownership, Walgreens will have greater flexibility to make long-term strategic decisions without the pressure of quarterly earnings reports. Analysts suggest that a leaner and more efficient Walgreens, possibly with smaller retail locations and adjusted reimbursement models, could revitalize the chain.
Evercore ISI analyst Elizabeth Anderson noted, “The retail drugstore business still has a future—people clearly need medications, and sometimes they need them immediately.”
Operational Changes and Divestitures
Walgreens CEO Tim Wentworth has implemented aggressive cost-cutting measures, including store closures and investment divestitures. The company recently suspended its quarterly dividend for the first time in 92 years. Walgreens also plans to divest its stake in VillageMD, a health clinic chain in which it had invested heavily. The company had already written down $5.8 billion in value from the business.
As part of the deal, Walgreens shareholders will receive rights to an additional $3 per share in cash from the future sale of VillageMD, potentially boosting the total deal value. If fully realized, this additional payout would represent a 63% premium over Walgreens’ trading price prior to the initial reports of the acquisition.
Stefano Pessina Retains a Stake
Executive Chairman Stefano Pessina, who holds approximately 17% of Walgreens, will retain a significant equity interest in the company post-acquisition, reinvesting proceeds from the deal into the acquiring entity.
Financial and Legal Advisors
The acquisition is backed by several major financial institutions. Centerview Partners is serving as Walgreens’ financial adviser, with Morgan Stanley also advising. Sycamore Partners has enlisted UBS Investment Bank as its lead financial adviser, alongside co-lead advisers Goldman Sachs, JPMorgan Chase & Co., Citigroup, and Wells Fargo.
Sycamore Partners’ Retail Focus
New York-based Sycamore Partners specializes in retail and consumer-focused investments. Its current portfolio includes restaurant franchiser Playa Bowls, fishing supply company Pure Fishing, and apparel brands LOFT and Ann Taylor. Walgreens will be a significant addition to its growing portfolio, offering potential synergies and expansion opportunities in the evolving healthcare and retail landscape.
