Walgreens Stock Jumps as Drugstore Chain Reportedly Nears $10B Take-Private Deal

Walgreens Boots Alliance (WBA) shares surged on Tuesday, March 4, 2025, following reports that the drugstore chain is nearing a deal to be taken private by private-equity firm Sycamore Partners in a transaction valued at around $10 billion. The proposed deal, which could be announced as soon as Thursday, would see Sycamore paying between $11.30 and $11.40 per share in cash for Walgreens, according to The Wall Street Journal.

The potential buyout comes as Walgreens has been struggling with earnings declines and a challenging retail environment. The company announced in October 2024 that it would close approximately 1,200 underperforming stores over the next three years, including around 500 closures in fiscal 2025, which would be immediately accretive to adjusted EPS and free cash flow. Walgreens also suspended its quarterly dividend in 2024 to conserve cash.

Walgreens' shares have been volatile in recent months, spiking on rumors of a buyout in December 2024 but retreating since then. As of March 4, 2025, Walgreens shares were trading at around $10.88 in premarket trading, up 6% on news of the potential buyout by Sycamore Partners.

The proposed deal, if completed, would represent a significant premium to Walgreens' current stock price. However, investors should consider several factors when evaluating the offer:

1. Earnings stabilization and turnaround efforts: Walgreens has been working on stabilizing its earnings and implementing a turnaround plan under new CEO Tim Wentworth. Investors should consider the likelihood of success for these efforts and how they might impact the company's intrinsic value.
2. Macroeconomic trends and challenges: Walgreens has been evaluating macroeconomic trends and challenges, and it is important for investors to consider these factors as well. The company has not provided guidance beyond fiscal 2024, but it has indicated that it will continue to evaluate these trends and challenges.
3. Potential breakup and value creation: Sycamore Partners has proposed splitting Walgreens into three separate companies: the main Walgreens pharmacy in the United States, the Boots pharmacy and chemist in the United Kingdom, and the specialty pharmaceutical unit Shields Health Solutions. This breakup could potentially create value for shareholders, but investors should consider the risks and benefits of this strategy.

In conclusion, the proposed buyout by Sycamore Partners represents a significant premium to Walgreens' current stock price, but investors should consider the company's earnings stabilization efforts, turnaround plans, macroeconomic trends, and the potential benefits and risks of a breakup when evaluating the offer. By using specific examples and data from the materials, investors can make a more informed decision about whether the offer is a good value for Walgreens shareholders.