Sycamore Partners Takes Over Walgreens, Splits Business into Independent Units

Walgreens has replaced its CEO and split into separate companies following its acquisition by private equity firm Sycamore Partners. Mike Motz, former CEO of Staples US Retail, will lead the retail pharmacy unit. Tim Wentworth, former CEO of Walgreens Boots Alliance, will become a director of the retail pharmacy unit. The separation aims to address the challenges faced by US retail pharmacies, including declining prescription reimbursements and online competition.

Walgreens Boots Alliance (WBA) has undergone a significant transformation following its acquisition by Sycamore Partners. The 124-year-old retail pharmacy giant has split into separate standalone companies, marking a significant shift in its business structure. This move comes as the company seeks to address the challenges faced by US retail pharmacies, including declining prescription reimbursements and increased online competition.

The acquisition, announced on Thursday, saw Sycamore Partners closing the deal to acquire Walgreens Boots Alliance. The company will now operate as a private entity, ceasing to exist as a vertically integrated business on the Nasdaq. The various business segments, including Walgreens, The Boots Group, Shields Health Solutions, CareCentrix, and VillageMD, will operate independently.

Mike Motz, the former CEO of Staples US Retail, has been appointed as the new CEO of Walgreens. Motz replaces Tim Wentworth, who will continue to serve as a director of the retail pharmacy unit. John Lederer, a former director of Walgreens Boots Alliance and a senior advisor to Sycamore, has been appointed Executive Chairman of Walgreens.

The separation aims to address the challenges faced by US retail pharmacies. Under Wentworth, Walgreens has been focused on a turnaround strategy, including shuttering stores and reducing store sizes to boost profitability. However, the company has faced pressure from e-commerce and delivery apps, which have impacted front-of-store sales.

Stefano Pessina, Walgreens' longtime chairperson, remains involved in the business and has reinvested 100% of his interests in WBA. This demonstrates his ongoing support and confidence in the company's future. Walgreens stock will cease trading, and shareholders will receive $11.45 per share plus an additional up to $3 per share from the net proceeds of any potential future sales of VillageMD.

References:
[1] https://seekingalpha.com/news/4490043-walgreens-to-operate-as-private-standalone-company-following-acquisition-by-sycamore-partners
[2] https://finance.yahoo.com/news/walgreens-goes-private-as-sycamore-closes-deal-staples-ceo-to-replace-tim-wentworth-133714260.html