Walgreens to Go Private in $23 Billion Deal
Walgreens Boots Alliance has announced an agreement to be acquired by private equity firm Sycamore Partners in a deal valued at up to $23.7 billion. The acquisition marks the end of Walgreens’ nearly century-long tenure as a publicly traded company, dating back to 1927.
A Strategic Shift Amid Market Challenges
The buyout comes as Walgreens faces mounting financial difficulties, including declining prescription reimbursements, rising operational costs, and increased competition. The company has been struggling with persistent retail theft, inflation-sensitive shoppers, and costly expansions into healthcare services.
Under the terms of the deal, Sycamore will pay $11.45 per share in cash, with additional payments of up to $3 per share contingent on specific conditions. The total enterprise value, including debt, brings the transaction close to $24 billion.
According to Walgreens CEO Tim Wentworth, taking the company private will provide the flexibility needed to execute long-term strategic changes without the short-term pressures of Wall Street. “While we are making progress against our ambitious turnaround strategy, meaningful value creation will take time, focus, and change that is better managed as a private company,” Wentworth stated.
Store Closures and Cost-Cutting Measures
As part of its ongoing restructuring, Walgreens has been closing underperforming stores. The company previously announced plans to shut down approximately 1,200 locations by 2027—accounting for about one in seven of its U.S. stores. This follows a series of cost-cutting measures, including the suspension of its quarterly dividend and the reduction of its stake in drug distributor Cencora to raise cash.
Similarly, rival CVS Health has been forced to cut costs, laying off thousands of employees and lowering its profit outlook due to rising Medicare-related expenses. Meanwhile, Rite Aid emerged as a private company in late 2024 following a Chapter 11 bankruptcy restructuring.
Financial Decline and Competitive Pressures
Once a dominant player in the drugstore industry, Walgreens has seen its stock price decline nearly 80% over the past five years, dropping from a market cap of around $100 billion to just under $10 billion. The stock rebounded in recent months amid speculation about the buyout, with the final deal offering a 30% premium over its December valuation.
Despite its vast network of stores and healthcare ventures, Walgreens has lagged behind CVS Health, which benefits from greater scale and a strategic alignment with a health insurer. CVS acquired Aetna in 2018, giving it a competitive edge in negotiating prescription prices. Walgreens, in contrast, focused on acquiring healthcare providers like VillageMD, a strategy that required heavy investment in real estate, technology, and skilled labor.
Sycamore Partners’ Vision for Walgreens
Sycamore Partners, known for its investments in consumer and retail brands, has indicated that Walgreens will continue operating under its current portfolio, headquartered in the Chicago area. Industry analysts predict that Sycamore may look to streamline operations further, potentially selling off international assets such as UK-based Boots to maximize returns.
Retail and healthcare analyst Neil Saunders described the acquisition as a “long-term investment rather than a quick profit opportunity,” emphasizing that Walgreens faces significant challenges across its pharmacy, healthcare, and retail divisions.
What’s Next for Walgreens?
The buyout is expected to close in the fourth quarter of 2025, pending regulatory approval. Walgreens’ future will depend on how well Sycamore navigates the company’s financial headwinds, adapts to evolving consumer trends, and positions the brand in an increasingly competitive healthcare landscape.
With a shrinking physical footprint, ongoing cost-cutting initiatives, and potential asset sales on the horizon, Walgreens is set for a major transformation. Whether this transition will lead to long-term stability remains to be seen.
