Walgreens in talks to sell company to private equity firm: WSJ

Walgreens is reportedly in talks to sell itself to private equity firm Sycamore Partners.

Walgreens and Sycamore have been discussing a deal that could close in early 2025, according to a Tuesday report from the Wall Street Journal, which cited people familiar with the matter. The deal would take Walgreens off the public market.

Related: How Walgreens, CEO Tim Wentworth got to today

A Walgreens spokesperson declined to comment on what the company called rumors and speculation. The company's share prices soared by 20% after the news broke.

Sycamore would likely sell off pieces of the company or work with partners, if the deal comes to fruition, the report said.

The size of the potential deal means Sycamore would likely need partners to complete it, Evercore ISI analysts said in a Tuesday report.

“Ultimately, we think the transaction would not be without risk, but would be a positive for public shareholders given ongoing business headwinds. Should a deal come to fruition, we would anticipate that a restructuring of WBA may likely be easier outside of public eyes,” the report said.

Walgreens has struggled with profitability due to pressures on its pharmacy business and less consumer demand on the retail side. The company’s market value exceeded $100 billion in 2015, following its full merger with Europe-based Alliance Boots in late 2014. Its value has since plummeted to less than $8 billion.

The retail pharmacy chain implemented a $1 billion cost-cutting program just over a year ago and brought in former insurance executive Tim Wentworth as CEO to turn around operations. Earlier this year, executives began a strategic review of the entire company.

Meanwhile, the company is refocusing on its core pharmacy business and pulling back from its healthcare services venture centered on primary and multispecialty provider VillageMD.

Walgreens invested $5.2 billion in 2021 to take a majority stake in VillageMD, with plans to open hundreds of primary care clinics. However, those plans soon soured. Walgreens took a $6 billion hit on its VillageMD investment and is now looking to sell at least part of its ownership stake. Former VillageMD CEO Tim Barry stepped down late last month.

Walgreens reported an $8.6 billion net loss in fiscal 2024 and said it would close 1,200 stores over the next three years, including 500 in the next year. Its U.S. healthcare services division reported $14.2 billion in operating losses in 2024.

Wentworth brought in Mary Langowski in March to lead U.S. healthcare services, ousting former head John Driscoll.

New York-based Sycamore Partners is a private equity firm that specializes in consumer, distribution and retail investments. It acquired office supply company Staples for almost $7 billion in 2017. Other investments include Ann Taylor Loft, Aéropostale and Belk.

A spokesperson declined to comment on any discussions about purchasing Walgreens.

A private equity takeover may be Walgreens’ last hope, as it would likely bring discipline, management changes and protection from the public market, Erik Gordon, assistant professor at the University of Michigan's Ross School of Business, said in an email.

“The company suffered through a CEO who did the lousy Boots Alliance acquisition, a CEO who presided over two-and-a-half years of disastrous decline, and one with no retail pharmacy experience,” Gordon said.