Struggling U.S. pharmacy chain Walgreens Boots Alliance (WBA) has finalized a deal that will see it bought by private equity firm Sycamore Partners for $10 billion and taken private.
Media reports say Sycamore is paying $11.45 per share in cash for Walgreens. Shareholders could also receive $3 more per share in the future from sales of Walgreens’ primary-care businesses. Walgreens said the total value of the deal could be $23.7 billion when debt and possible future payouts are included.
Sycamore Partners is expected to maintain Walgreens U.S. business but sell some parts of the company. The take-private deal is scheduled to close in this year’s fourth quarter and comes as Walgreens continues to struggle with dwindling foot traffic and sales at its stores following the Covid-19 pandemic.
End of an Era
The deal ends Walgreens’ run as a public company, which began in 1927. The upcoming delisting of WBA stock comes after shares in the retail pharmacy chain declined 46% over the last 12 months and are down 71% in the past five years.
While the company got a boost during the Covid-19 pandemic as people visited its locations to get vaccinated, those gains have since faded, leading to declining sales and profits. Walgreens currently has a market capitalization of just under $10 billion, down from $100 billion a decade ago. So far this year, WBA stock has risen 15%.
Is WBA Stock a Buy?
The stock of Walgreens Boots Alliance has a consensus Hold rating among 11 Wall Street analysts. That rating is based on one Buy, seven Hold, and three Sell recommendations issued in the last three months. The average WBA price target of $11.33 implies 6.89% upside from current levels.
