Key moments
- Discussions are underway for a potential buyout deal with prices ranging from $11.30 to $11.40 per share.
- Walgreens stock experienced a 6.6% increase in premarket trading, reaching $10.94.
- Walgreens share prices have decreased in half over the past 12 months.
Walgreens’ Stock Has Suffered Annual Decline of 51%
Walgreens Boots Alliance is nearing a $10 billion buyout agreement with private equity firm Sycamore Partners, according to recent reports. The potential acquisition has led to a surge in Walgreens’ stock prices, with premarket trading showing a 6.6% increase to $10.94. This comes after a period of significant decline for the company, with its shares having fallen 51% in the past year.
The proposed deal involves Sycamore Partners acquiring Walgreens for a cash price between $11.30 and $11.40 per share. The agreement could be finalized as soon as Thursday, barring any last-minute complications. Sycamore is reportedly working with major financial institutions like Bank of America and JPMorgan Chase to secure the necessary funding for the transaction.
If the buyout goes as planned, Sycamore intends to take Walgreens private, which would remove the company’s shares from public trading. The private equity firm plans to retain Walgreens’ core U.S. retail operations while exploring options to sell or take public other divisions of the company. These divisions include the British pharmacy chain Boots, U.S. healthcare provider VillageMD, U.S. drugstore chain Duane Reade, and the beauty brand No7 Beauty Co.
Walgreens’ market capitalization has significantly decreased, falling from over $100 billion in 2015 to below $9 billion recently. This decline has been attributed to shrinking margins in the prescription business and challenges in its expansion into primary care. Under the leadership of CEO Tim Wentworth, Walgreens has been focusing on closing underperforming stores and stabilizing its retail operations.
Wall Street analysts have issued a consensus “Hold” rating for Walgreens stock, with an average price target of $11.33. Analysts at Leerink Partners have expressed concerns about the reported takeout price, noting that it is below levels they had previously analyzed for a leveraged buyout.
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