Walgreens Boots Alliance (WBA) has entered risky territory after the pharmacy chain announced a deal with Sycamore Partners. This would take the retailer private, removing shares of WBA stock from public trading. This has some experts wondering if Walgreens will survive going private.
Mark Cohen, a former head of retail studies at Columbia Business School, spoke with CNN about the dangers Walgreens will face by going private. He noted that the agreement “sounds like a good idea,” but that “from a historical point of view, most of these deals result in the company circling the drain.”
Cohen arguments are based on the idea that there are two potential futures for companies taken private. The first is a turnaround of the business that results in the private equity firm making money by returning a profitable company to the public market. The second has the firm pulling as much profit as possible from the business before shuttering it and selling its assets.
Which Future Is Walgreens Heading Toward?
It’s still unclear if Walgreens will bounce back from going private or if the company has dark days ahead of it. There’s no denying its future looks grim with the pharmacy sector struggling lately. That’s even led to rival CVS Health (CVS) announcing plans for new stores that cut out much of its retail offerings to focus on the pharmacy business.
Which Pharmacy Stock Should Traders Invest In?
With Walgreens going private, traders will want to look elsewhere for pharmacy investments. The previously mentioned CVS Health remains a top player in the space with a consensus Strong Buy rating and an average $71.83 private target, representing a potential 8.32% upside. Its changing store plans may also make it an attractive investment for traders looking to overcome the pharmacy slump.
