NEW YORK — Walgreens Boots Alliance says it has agreed to be acquired by personal fairness agency Sycamore Companions because the struggling retailer seems to be to show itself round after years of dropping cash.
Walgreens stated Thursday that Sycamore pays $11.45 per share, giving the deal an fairness worth slightly below $10 billion. Shareholders may finally obtain as much as one other $3 per share below sure circumstances.
A buyout to take the pharmacy chain personal would give it extra flexibility to make modifications to enhance its enterprise with out worrying about Wall Avenue’s response. The corporate has already been making some huge modifications because it seeks to show round its enterprise. Walgreens has been a public firm since 1927.
Walgreens, based in 1901, has been coping with skinny prescription reimbursement, rising prices, persistent theft and inflation-sensitive buyers who’re in search of bargains elsewhere. Walgreens is within the early phases of a plan to shut 1,200 of its roughly 8,500 U.S. places.
The Deerfield, Unwell., firm had already shed a few thousand U.S. shops because it grew to just about 9,500 after shopping for some Ceremony Support places in 2018.
The corporate additionally stated final August that it was reviewing a U.S. well being care operation it had expanded aggressively, and it would promote all or a part of its VillageMD clinic enterprise. That announcement got here lower than two years after the corporate stated it might spend billions to broaden it.
Shares of Walgreens shed almost two thirds of their worth final 12 months. Walgreens stated the transaction value represents an almost 30% premium to the share value in December when reviews of a deal first surfaced. Walgreens CEO Tim Wentworth confirmed in January {that a} sale course of for the enterprise was underway. Together with debt, the worth of the deal is slightly below $24 billion, the corporate stated.
Walgreens stated earlier this 12 months it was making progress enhancing prescription reimbursement.
Walgreens has additionally taken steps to protect money. It stated in January that it was suspending a quarterly dividend it has provided for greater than 90 years, and it’s been lowering its stake within the drug distributor Cencora this 12 months to get money partly to pay down debt.
In the end, the corporate has to enhance its money movement, whether or not it stays publicly traded or goes personal, Leerink Companions analyst Michael Cherny stated in a Feb. 23 analysis observe.
“Management has not been shy about its push to improve the cash flow generation profile as part of the turnaround plan,” the analyst wrote. “Without cash flow, none of the value cases work.”
Walgreens Boots Alliance Inc. additionally runs almost 3,700 worldwide shops, with places in the UK, Mexico, Thailand and Eire.
The Walgreens buyout comes after competitor Ceremony Support emerged final September as a personal firm from a Chapter 11 chapter reorganization. Remaining publicly traded drugstore operators embrace the nation’s largest, CVS Well being Corp., and retailers like Walmart and the grocery store Kroger that run pharmacies at lots of their places.