Walgreens Boots Alliance announced a significant transformation as it plans to go private in a deal valued at up to $23.7 billion. The transaction, led by private equity firm Sycamore Partners, marks the end of Walgreens' near century-long history as a publicly traded company. As part of this strategic shift, the company will shutter approximately 1,200 locations, a move that reflects ongoing struggles and an effort to stabilize its business.
More than 10% of Walgreens' locations will close by 2027, with the company currently operating around 8,500 stores across the United States. Walgreens has faced a challenging landscape, contending with declining prescription reimbursements and increased competition from entities like Amazon. These factors have considerably impacted its financial standing, with the company's market value plummeting from $100 billion a decade ago to just around $9.5 billion today.
Walgreens' shares have seen a sharp decline, losing nearly 80% of their value over the past five years. The decision to go private is viewed as a strategic move to better manage the necessary changes and focus on long-term value creation outside the public markets.
"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
The reported purchase price of $11.45 per share in cash by Sycamore Partners aims to reinvigorate the company's operations and financial health. Walgreens has been closing hundreds of stores over recent years, struggling with lower reimbursement rates for prescription drugs and the competitive pressure from new market players.
Despite these hurdles, there have been encouraging signs for Walgreens. The company's prospects brightened after news surfaced about its discussions to go private, offering a potential pathway to recovery. This transition is expected to close in the fourth quarter of 2025.