Walgreen Boots Alliance Acquired by PE Firm

Walgreens Boots Alliance will be taken private by Sycamore Partners for $10 billion. The move ends nearly 100 years of trading on public markets for the US pharmacy giant. The price is a fraction of the $100 billion the second-largest US pharmacy chain was worth a decade ago. WBA’s fortunes fell as drug margins dropped. At the same time, consumers turned to cheaper options like Amazon and Walmart to fill prescriptions and buy toiletries.

Sycamore, a private equity firm, will pay $11.45 per share, a premium of 8% to Walgreens’ closing price of $10.60 on Thursday. Shares of the company rose nearly 6% in extended trading. Walgreens shareholders may get $3 in cash from future monetization of the company’s debt and equity interests in primary-care provider VillageMD. The transaction has a total value of around $23.7 billion including payouts and debt, according to Leerink Partners investment bank.

The company’s market capitalization has dropped 90% since 2015 to $9.3 billion on Thursday, with debt and lease obligations ballooning to almost $30 billion.

Sycamore specializes in retail and consumer investments, has a track record of acquiring distressed retailers for profit including brands such as Staples, Talbots and Nine West.

Walgreens Boots Alliance CEO Tim Wentworth said in a statement that the company was making progress on its turnaround strategy, but meaningful value creation would take “”time, focus and change that is better managed as a private company.”

Last year, WBA sold its Boots subsidiary.