Walgreens Boots Alliance, proprietor of the Boots pharmacy chain since 2014, is about to be acquired by US non-public fairness agency Sycamore Companions for $10 billion (£7.7 billion).
Sycamore’s provide of $11.45 per share, which represents an 8 per cent premium on Walgreens’ most up-to-date closing worth, stands in stark distinction to the $85 per share peak reached in 2015, when the corporate was valued at over $90 billion.
Over the previous 12 months, Walgreens’ share worth has virtually halved amid stiff competitors from on-line retailers and pressures on medical health insurance payouts. Regardless of using some 311,000 folks worldwide, the corporate has struggled to take care of profitability, prompting its management to think about a number of strategic strikes — together with carving out Boots — each time its market cap slumped.
Sycamore Companions, based mostly in New York, owns US-based stationery chain Staples (acquired for $7 billion in 2017) and healthy-eating restaurant chain Playa Bowls. It has beforehand owned Kurt Geiger and tried to buy Ted Baker in 2022. The Walgreens transaction features a 35-day “go-shop” window, throughout which the US pharmacy large can invite and assess competing bids.
Walgreens Boots manages about 12,500 pharmacies worldwide, together with 1,900 Boots shops within the UK. The chain’s roots date again 174 years, having been credited with popularising pharmacy-led retail throughout Britain. Though it benefited from an explosion of demand within the Nineteen Nineties and early 2000s, Boots has confronted recent competitors lately, coupled with periodic monetary burdens stemming from its mum or dad firm’s shifting fortunes.
Underneath Sycamore Companions’ possession, Walgreens is about to go non-public, with chief government Tim Wentworth arguing that the group’s “ambitious turnaround strategy” will likely be extra successfully managed away from the general public glare. Stefan Kaluzny, Sycamore’s managing director, says the agency stays assured within the “pharmacy-led model” and “essential role” of the Walgreens Boots community.
Analysts similar to Michael Cherny at Leerink Companions expressed little shock on the announcement, noting that the size and complexity of the deal made a rival provide unlikely. By the point the deal closes within the fourth quarter of this 12 months, each the long-lasting Boots model and Walgreens’ broader international operations will likely be below Sycamore’s possession, signalling a major shake-up in each British and worldwide pharmacy retail.
