The drugstores chain that Stefano Pessina heads has an equity value in the region of 10 billion while its 2015 market capitalization amounted to 100 billion
Sycamore Partners, a private equity with a focus on the retail, consumer goods and distribution sectors, signed an agreement for acquiring NYSE-listed drugstores chain Walgreens Boots Alliance with a deal 23.7 billion US Dollars on the ground of a 10 billion equity value (press release). WBA board unanimously approved the proposed transaction, which should close in 4Q25.
Sycamore will pay 11,45 USD per share in cash. The fund could pour a further cash amount of up to 3 USD per share out of the future sale of VillageMD, the owner of Village Medical, Summit Health and CityMD.
WBA Stock Price
The cash consideration represents a 29% premium, and the total consideration represents a reward of up to 63%, compared to the 8.85 USD closing price of WBA shares on 9 December 2024, the day before media reported of a potential transaction.
WBA market capitalization hit a peak of above 100 billion in 2015, but since then it dropped to less than 8 billion at the end of 2024 as the company faced the fierce competition of CVS, Amazon and other consumer goods retailers.
WBA has 311000 workers, it operates in eight countries and its brands portfolio includes Walgreens, Boots, Duane Reade, No7 Beauty Company, and Benavides.
In July 2007, KKR financed Stefano Pessina’s management buyout of UK Alliance Boots. The deal was worth 11.1 billion GBPs and the debt amounted to 9 billion. US Walgreens later acquired Alliance Boots with a two-stages transaction which led to the merger of the two entities in 2015. Pessina became a shareholder, executive vice president and ceo of Walgreens Boots Alliance group while KKR completed the sale of its stake in November 2016 (Bloomberg). Bloomberg reported that in 2019 Pessina unsuccessfully held talks with KKR for delisting WBA on the ground of a 70 billion USD equity value as the company’s market capitalization already went 30% down since the stock market peak in 2015.
Pessina will invest in the present deal with Sycamore. The manager will pour in the company his own resources and those of his financial holding that have above 16.5% of WBA stocks. Pessina will tender all his shares to Sycamore offer, will reinvest all the cash that will receive and carry on a further investment in the acquisition vehicle for keeping a relevant minority of the target.
Tim Wentworth, the target’s ceo, said: “Throughout our history, Walgreens Boots Alliance played a key role in the retail healthcare ecosystem. We focus on making healthcare more effective, convenient and affordable, while addressing the challenges of a rapidly evolving pharmaceutical industry and an increasingly complex and competitive retail landscape. While we are making progress on our ambitious re-launch strategy, creating significant value will require time, focus and change that can be better managed as a private company. Sycamore will provide us with the expertise and experience of a partner with a solid track record of successful turnarounds in the retail sector. The WBA Board of Directors considered all of these factors in evaluating this transaction and we believe this deal provides shareholders with superior cash value, with the opportunity to benefit from further value creation in the future through the monetisation of VillageMD’s assets.”
Stefan Kaluzny, managing director of Sycamore Partners, added: “For almost 125 years Walgreens and for 175 years Boots, together with their portfolio of trusted brands, have been an integral part of patients’ and customers’ lives. Sycamore has a deep respect for the talented and dedicated members of the WBA team and is committed to managing the company’s iconic brands. This transaction reflects our confidence in WBA’s pharmaceutical model and its essential role in improving outcomes for patients, customers and communities.”
