3 Things to Know Before Investing in Walgreens Stock

Walgreens Boots Alliance's poor business performance and weak investments have led to a struggling pharmacy retail business. The company is being taken private by Sycamore Partners, with a guaranteed return of $11.45 per share in cash. However, investors should be aware that the sale of the medical clinic business, expected to occur after privatization, may provide a boost to shareholders.

Walgreens Boots Alliance (WBA), a prominent player in the pharmacy retail space, has been facing significant challenges in recent years. The company has struggled with weak business performance and misguided investments, leading to a need for a major overhaul. In a move to turn its business around, Walgreens Boots Alliance has agreed to be taken private by Sycamore Partners.

The most pressing issue for investors is Walgreens' poor business performance. The entire pharmacy retail sector has faced difficulties, but Walgreens has compounded these problems with substantial investments that did not yield the expected results. For instance, its foray into the pharmacy benefit management business did not live up to expectations, and the company's pivot to the medical clinic niche also failed to materialize as planned. Additionally, the company's retail store base has become bloated, necessitating a significant overhaul.

To facilitate this turnaround, Walgreens Boots Alliance has agreed to be acquired by Sycamore Partners. The deal, expected to close in the second half of 2025, will see Walgreens shareholders receiving $11.45 per share in cash. This guaranteed return is the primary upside for investors, given that the stock is currently trading slightly above the takeout price. However, it is crucial to note that this investment is not a long-term one, as Walgreens will be exiting the public market.

An additional factor to consider is the potential sale of Walgreens' medical clinic business, which is expected to occur after the company goes private. Sycamore Partners has offered shareholders a chit that entitles them to a portion of the proceeds from this sale, potentially worth up to $3 per share. This could represent an additional 25% upside for investors. However, the uncertainty surrounding the sale's timing and price makes this a high-risk, high-reward situation, suitable only for more aggressive investors.

In conclusion, while Walgreens Boots Alliance presents an opportunity for investors with a guaranteed return of $11.45 per share, the potential boost from the sale of the medical clinic business is highly uncertain. Investors should approach this situation with caution, as the long-term future of Walgreens as a public company remains unclear.

References:
[1] https://www.fool.com/investing/2025/07/26/3-things-you-need-to-know-if-buy-walgreens-stock/
[2] https://www.nasdaq.com/articles/3-things-you-need-know-if-you-buy-walgreens-stock-today