Walgreens Boots Alliance is set to go private in a deal valued at up to $23.7 billion, marking the end of a difficult period in the public markets, where the company has seen its market capitalization decline sharply and more than 10% of its store locations shuttered.
This transition brings nearly a century of public trading to a close. Walgreens, after launching its 100th store in Chicago, became a publicly traded company in 1927.
Private equity firm Sycamore Partners has agreed to acquire Walgreens for $11.45 per share in cash, according to a company statement. Including debt and potential future payments, the total value of the transaction could reach as high as $23.7 billion.
Over the past five years, Walgreens (WBA) shares have plummeted by nearly 80%, although they have seen a modest rebound in recent months amid speculation about the company’s potential move to private ownership.
Sycamore, which specializes in retail and consumer-focused investments, stated that Walgreens will continue operating under its current brand portfolio from the Chicago area.
“While we are making progress against our ambitious turnaround strategy, meaningful value creation will take time, focus and change that is better managed as a private company,” WBA CEO Tim Wentworth said in a statement on Thursday.
“Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds.”
Like competitors CVS and Rite Aid, Walgreens has struggled in recent years, closing hundreds of locations and dealing with declining prescription reimbursement rates. These challenges have significantly reduced its valuation, which has fallen from approximately $100 billion a decade ago to just around $9.5 billion today.
Walgreens has lagged behind CVS largely because of its smaller size, which has given it less negotiating power with insurers and other healthcare entities responsible for covering the costs of most prescriptions.
In October 2024, Walgreens announced plans to close about 1,200 stores, meaning roughly one in seven of its current locations will shut down by 2027. At present, the company operates around 8,500 stores across the United States.
These closures represent a substantial escalation from the company’s June 2024 announcement, when it revealed plans to shutter 300 underperforming locations as part of a long-term optimization strategy under CEO Tim Wentworth.
Walgreens PharmacyAt the time, Walgreens reported that about a quarter of its stores were unprofitable and pledged to implement “imminent” changes.
The company expanded significantly in the past through acquisitions, including its 2010 takeover of the New York-based drugstore chain Duane Reade.
In 2014, Walgreens completed the purchase of the remaining 55% stake in European pharmacy operator Alliance Boots for $5.3 billion in cash, while maintaining its corporate headquarters in the United States.
Stefano Pessina, Walgreens’ executive chairman, remains the company’s largest individual shareholder with a 17% stake. A central figure in the Walgreens-Alliance Boots merger, he has agreed to reinvest his holdings in the business.
Selling to a private equity firm “would be an elegant solution for extracting value for investors,” Neil Saunders, managing director of GlobalData, wrote in a December note. He also suggested that Sycamore might consider selling off UK-based pharmacy chain Boots to “maximize their return.”
“Walgreens is a big company with big problems, and this would be a longer-term investment rather than a way to make a quick buck,” Saunders wrote in a note on Tuesday.
“Cuts would most certainly be on the agenda, but the pathway to grow would be more challenging as the healthcare, pharmacy and retail sides of the business all have inherent problems that are not easily soluble.”
The company’s store closures come at a particularly difficult time for drugstore chains, which are facing mounting pressures on multiple fronts. Many have struggled due to falling reimbursement rates for prescription drugs, while competition from Amazon has further squeezed profits.
Unlike some of its rivals, “Walgreens did not strategically align with a payer, which could have helped to bridge its pharmacy and healthcare segments,” Tyler Giesting, Director of Healthcare M&A at consulting firm West Monroe, told CNN in an email. In contrast, CVS acquired health insurance giant Aetna in 2018.
Instead, Walgreens focused on acquisitions such as VillageMD clinics, an investment that required significant spending on real estate, technology, and specialized labor.
“Now, I expect there will be strong interest in Walgreens’ healthcare assets, given the increasing focus on value-based care and cost management in the industry,” Giesting said.
In addition to challenges in the prescription drug sector, Walgreens is also facing stiff competition in the retail space.
The front sections of its stores, which sell snacks and household staples, have come under pressure from larger competitors like Target. Even discount retailers like Dollar General have cut into Walgreens’ market share, particularly in rural areas.
Walgreens Boots Alliance expects the deal to be finalized in the fourth quarter of 2025.
