Walgreens Boots Alliance , is being acquired by a private-equity company for about$ 10 billion, the retail store huge announced Thursday.
An object affiliated with , Sycamore Partners , did acquire , Deerfield-based Walgreens in a package that will get the business secret. Sycamore is a , New York-based private-equity company specializing in retail, customer and distribution-related opportunities.
The business will continue to operate under the names Walgreens and Boots, and its headquarters may be in the , Chicago , place, according to a media release. The package is expected to close in the third quarter, pending investor and regulatory approval.
” While we are making progress against our optimistic turnaround plan, significant value development will take time, target and change that is much managed as a private business”, Walgreens CEO , Tim Wentworth , said in the media release. ” Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail transitions”.
The transaction is valued at up to$ 23.7 billion when including debt. A Walgreens director said the firm “had no more information to share” when asked Thursday if the deal would result to more job loss at the business. Sycamore did not immediately respond to a request for comment on the topic.
Debate has swirled for months about the private-equity package that was announced Thursday.
Under the terms of the deal, shareholders are to receive$ 11.45 per share when the acquisition closes, with another one-time right to receive up to$ 3 per share based on proceeds of divesting certain health care assets. The$ 11.45 represents a premium of 29 % to Walgreens ‘ closing share price of$ 8.85 on , Dec. 9, the day before media started reporting news of a potential deal.
The package follows years of problems for Walgreens, which has been grappling with industry-wide problems including issues related to treatment reimbursements as well as changing customer habits. Walgreens has also been dealing with the fallout from a past try to become more of a health care target by , investing billions of dollars , into primary care provider , VillageMD, with plans to put Village Medical hospitals in 1, 000 of its stores by 2027. Walgreens later reversed training on that program.
In response to those problems and others, Walgreens announced intentions in October to , camera 1, 200 stores , over the next three decades,  , including in , Chicago. Walgreens has also been slashing prices for years, including through , cuts in , Illinois , and other areas. Walgreens even recently , suspended its practice of paying money dividends , to owners for the first time in 92 times.
Wentworth had formerly unveiled a plan to turn the company about, largely by refocusing on its historical work as a financial pharmacy operation.
The move to take Walgreens private could help the business in the long run, said , Howard Gutman, private equity strategy and coverage lead at management consulting firm , MorganFranklin Consulting.
Walgreens is likely, under Sycamore, to be separated into smaller parts, with some of those parts potentially sold off, Gutman said.
” It’s no different than a lot of other companies that have multiple divisions and have to separate or divide in some fashion to do their best by their workers and shareholders”, Gutman said.
Some, however, worry about yet another health care-related company being controlled by private equity.
” We’ve seen with private equity-owned health care companies —- hospitals, clinics, other service companies —- we see in order to get the profits the private-equity firm has a goal of, they usually embark on heavy cost cutting”, said , Matthew Parr, a spokesperson for the , Private Equity Stakeholder Project, based in , Chicago. ” Sometimes that means cutting services”.
That could be a concern for patients who rely on Walgreens to get their medications, he said. ” It might be the only pharmacy in their community”, he said.
Under the deal, Walgreens Executive Chairman , Stefano Pessina, who owns 17 % of Walgreens ‘ shares, will vote all his shares in favor of the transaction and then reinvest in the company acquiring Walgreens. The Walgreens board of directors unanimously approved the deal, with Pessina recused from the deliberations and approval.
” This transaction reflects our confidence in ( Walgreens ‘ ) pharmacy-led model and essential role in driving better outcomes for patients, customers and communities” , , Stefan Kaluzny, managing director of , Sycamore Partners, said in the release.
Walgreens has about 12, 500 locations across the , U. S.,  , Europe , and , Latin America, and , Walgreens Boots Alliance , employs about 311, 000 people.
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