Stefano Pessina and his family are reinvesting. The group’s international operations will be merged into The Boots Group, led by CEO Ornella Barra
The mega-deal that delisted pharmacy giant Walgreens Boots Alliance (WBA) from the Nasdaq closed yesterday in a $23.7 billion deal based on an equity value of $10 billion (see the press release here). The transaction, made by Sycamore Partners Management, a private equity group specializing in investments in the retail, consumer, and distribution sectors, was announced last March (see here a previous article by BeBeez International) and was approved by the group’s shareholders’ meeting last July (see the press release here).
Sycamore acquired WBA in partnership with entrepreneur Stefano Pessina and his family, who reinvested 100% of their shares in WBA. Following the closing of the transaction, Walgreens, The Boots Group, Shields Health Solutions, CareCentrix and VillageMD have been spun off and will operate as separate, independent companies, with Stefano Pessina and his family reinvesting 100% of their shares in each of the former subsidiaries.
Specifically, The Boots Group will comprise the former international businesses of Walgreens Boots Alliance, including Boots UK&I, Boots Opticians, No7 Beauty Company, Boots pharmacies in Thailand, and international franchised retail operations, along with Farmacias Benavides in Mexico, Alliance Healthcare Germany, and existing retail investments in China (see the press release here). The Boots Group will continue to be led by Ornella Barra as CEO and will be registered and headquartered in the UK, ensuring continuity of management. Management will continue in their current roles, most notably with Anthony Hemmerdinger as Senior Vice President and Managing Director of Boots UK & Ireland.
Stefan Kaluzny, Managing Partner of Sycamore, said: “Walgreens Boots Alliance, Inc., its companies, and its dedicated teams play an essential role in the communities they serve around the world. We look forward to collaborating with the leadership teams of each company, including Walgreens, The Boots Group, Shields Health Solutions, CareCentrix, and VillageMD. As independent, privately owned companies, they will leverage their proud heritage to enhance the customer experience and deepen the trusted relationships they have built with millions of customers around the world.”
Stefano Pessina said: “This milestone marks the beginning of a new chapter for Walgreens, The Boots Group, and the other companies in our portfolio. Our family has proudly supported these companies for decades, and we are delighted to continue this commitment alongside Sycamore. Together, we firmly believe in the future of these organizations and the essential role they play in the lives of millions of people every day.”
Ornella Barra, Pessina’s wife, CEO of The Boots Group and currently COO of WBA International, added: “I am proud of the company we have created and excited about this new transaction. I would like to thank our colleagues around the world who have helped build this company, which I am honored to lead in the next phase of our journey. Sycamore’s retail experience and the Group’s solid foundation will enable us to execute our leadership strategy in the markets and communities we serve.”
We recall that Walgreen Boots Alliance was the result of a journey that began in July 2007, when KKR financed the management buyout of Alliance Boots, then the largest pharmacy chain in the United Kingdom, in partnership with Stefano Pessina, then deputy chairman of Alliance Boots, beating out a bid from Terra Firma Capital Partners. It was an £11.1 billion (then $22.2 billion) deal, financed with £9 billion in debt and ranked at the time as the largest buyout in European history. Subsequently, the US-based Walgreens, which had listed on the Nasdaq at the end of 2014, acquired Alliance Boots in a two-stage deal, which led to the merger of the two entities in 2015, with Mr. Pessina becoming a shareholder of the new Walgreens Boots Alliance group, serving as executive vice president and CEO, and with KKR definitively exiting the capital in November 2016 (see here Bloomberg). WBA’s market value peaked at over $100 billion in 2015, but its market capitalization has since steadily declined to less than $8 billion at the end of 2024 due to competition from its main rival CVS, grocery chains, large retailers, and Amazon. In 2019, when the group had already lost nearly a third of its value since its 2015 stock market peak, Mr. Pessina had again entered into negotiations with KKR for a takeover bid that would delist the stock, asking for an equity value of $70 billion, but the deal fell through (see here Bloomberg).
Mr. Pessina has now reinvested in the group alongside Sycamore, both personally and through his holding company, which together owned approximately 17% of WBA’s outstanding common shares. Under the agreements, Mr. Pessina and his holding company contributed all of their WBA common shares to Sycamore’s tender offer, reinvested all of their cash consideration received in the transaction, and will also make an additional cash investment in the acquiring company.
