The US owner of the high street chemist Boots, Walgreens Boots Alliance, has announced plans to take the company private in a substantial $10 billion (£7.8 billion) deal. The Illinois-based Walgreens has held a stake in Boots since 2012 and acquired full ownership two years later. This strategic move is set to conclude nearly a century of public trading for the company, with the deal expected to close in the fourth quarter of this year. The private equity firm Sycamore Partners will pay $11.45 per share for Walgreens, a premium over its current market value.
The decision to take Boots private follows a challenging period for the pharmacy chain, which recently closed around 300 stores across the UK as part of efforts to consolidate its business. Currently, there are 1,900 Boots stores remaining in the country. The exact implications of this deal for Boots and its UK operations remain uncertain.
Tim Wentworth, CEO of Walgreens, highlighted the rationale behind the move, stating:
"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."
Walgreens faced mounting challenges as customers increasingly turned to cheaper alternatives for groceries and prescriptions. In 2022, the company attempted to sell Boots but ultimately withdrew the plan due to buyers' inability to secure sufficient funds. Additionally, last October, Walgreens announced the closure of 1,200 stores in the US over three years under a cost-cutting initiative.
The total value of the transaction, including debt and potential future payouts, could reach up to $23.7 billion. The announcement led to a nearly 6% rise in Walgreens' shares during extended trading in New York.
Tim Wentworth further explained the challenges driving this decision:
"challenges of a rapidly evolving pharmacy industry and an increasingly complex and competitive retail landscape"