Walgreens Stock Jumps on Report of Possible Sycamore Deal

Walgreens Boots Alliance (WBA) shares surged this week following reports that private equity firm Sycamore Partners is in talks to acquire the struggling drugstore chain. The potential deal, which could value WBA at up to $10 billion, has sparked optimism among investors, with the stock price climbing over 20% in late trading on Tuesday (11 December).

The reported discussions come as Walgreens' share price has plummeted from over $100 billion in 2015 to just $7.5 billion in recent months. News of the talks with Sycamore Partners led to a significant rebound in WBA's stock price, which jumped 20% during late trading on Tuesday.

Sycamore Partners has a track record of investments in the UK retail sector, including past stakes in Kurt Geiger and offers for Ted Baker in 2022. However, it is considered unlikely that Sycamore would acquire WBA in its entirety, given its recent focus on smaller deals. Instead, Sycamore might seek separate ownership for UK subsidiary Boots, potentially triggering a fresh auction for the British high street giant.

Walgreens' billionaire chairman and largest shareholder, Stefano Pessina, may end up as the principal owner of Boots depending on the deal's structure. Pessina, which owns a 17% stake in WBA, has been a key figure in Walgreens' acquisitions over the past two decades.

WBA operates approximately 12,500 pharmacies globally, including 1,900 Boots stores in the UK. However, the US-based company has explored selling or spinning off its Boots operations a number of times in recent years as it has faced pressure to concentrate on its domestic market.

Back in 2022, WBA attempted to sell the Boots for an estimated £7 billion but abandoned the plan, deciding that offers from firms including Apollo Global Management undervalued the retailer. Earlier this year, the company revisited the idea of a sale or UK listing but shelved those plans in June, citing its strategic value and cash flow contributions. Weeks later, Boots managing director Seb James announced his resignation, as the retailer promoted ex-Asda MD Anthony Hemmerdinger to the role.

While Walgreens reported an $8.6 billion net loss in its latest financial year and continues to struggle with sluggish US consumer spending and low reimbursement rates for drugs, Boots has shown relative resilience. Sales in stores rose 6.2% in the quarter ending August, driven by higher footfall in city centers and travel hubs. Pharmacy growth increased 10% year-over-year, supported by demand for NHS and private healthcare services.



The private equity firm circling Boots the Chemist's parent company is lining up financing from a syndicate of banks for a prospective $10 billion-plus takeover deal. Sky News has learnt that Sycamore Partners is arranging debt funding for a deal to buy Walgreens Boots Alliance, with Bank of America, JP Morgan, and Wells Fargo among those understood to be in the frame. If completed, a takeover would see Sycamore take one of the biggest providers of retail pharmacy services in the US and Britain private.



In conclusion, the reported talks between Walgreens Boots Alliance and Sycamore Partners have sparked optimism among investors, with the stock price surging over 20% in late trading on Tuesday. While the potential deal could bring fresh investment and strategic direction to the struggling drugstore chain, it remains to be seen whether Sycamore Partners will ultimately acquire WBA or seek separate ownership for its UK subsidiary, Boots. As the situation develops, investors will be closely watching for further updates on the potential deal and its implications for Walgreens Boots Alliance's future.