Boots’ American owners have agreed to sell the healthcare company in a deal worth billions. Private equity firm Sycamore Partners has agreed to buy the High Street chain‘s owners as the beleaguered retailer seeks to reverse its financial losses. Walgreens Boots Alliance announced on Thursday that Sycamore will pay $11.45 (£8.89) per share, valuing the deal just shy of $10 billion (£7.76bn).
Shareholders could potentially receive up to an additional $3 (£2.33) per share under certain conditions. The move to take the chain private would provide greater flexibility for business improvements without concern for Wall Street’s response, backers of the deal say.
However, there is no confirmation as yet for what the deal means for the 1,800 Boots stores across the UK. The move follows plans to close 300 Boots locations last year.
Walgreens, which has been publicly traded since 1927, and was established in 1901, has grappled with escalating costs in the US, persistent theft, and price-conscious shoppers seeking better deals elsewhere. It is also in the initial phase of a plan to close 1,200 of its approximately 8,500 US stores.
The Illinois-based company had already reduced its US store count by around a thousand since expanding to nearly 9,500 after acquiring some Rite Aid locations in 2018. Walgreens’ shares lost nearly two-thirds of their value last year.
Boots ‘integral’ to customers’ lives
Tim Wentworth, Chief Executive Officer, Walgreens Boots Alliance, said: “Throughout our history, Walgreens Boots Alliance has played a critical role in the retail healthcare ecosystem. We are focused on making healthcare delivery more effective, convenient and affordable as we navigate the challenges of a rapidly evolving pharmacy industry and an increasingly complex and competitive retail landscape.
“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. Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds.
“The WBA Board considered all these factors in evaluating this transaction, and we believe this agreement provides shareholders premium cash value, with the ability to benefit from additional value creation going forward from monetisation of the VillageMD businesses. Our trusted brands and deep commitment to our customers, patients, communities and team members have and will continue to anchor our business as we realize our goal of being the first choice for pharmacy, retail and health services.
“I am grateful to the more than 311,000 team members globally who are fiercely committed to WBA, our customers and patients. For nearly 125 years, Walgreens, and for 175 years, Boots, along with their portfolio of trusted brands, have been integral to the lives of patients and customers.”
Stefan Kaluzny, Managing Director of Sycamore Partners, added: “Sycamore has deep respect for WBA’s talented and dedicated team members, and we are committed to stewarding the Company’s iconic brands. This transaction reflects our confidence in WBA’s pharmacy-led model and essential role in driving better outcomes for patients, customers and communities.”