By Anirban Sen and Leroy Leo
(Reuters) -Walgreens Boots Alliance is in talks to promote itself to personal fairness agency Sycamore Partners, based on an individual accustomed to the matter, the most recent try by the pharmacy chain operator to go personal after a pointy droop in share worth.
Walgreens has been working with its advisers over the previous few weeks and had additionally reached out to different potential consumers however is presently in talks with solely Sycamore, the supply mentioned.
A possible deal is almost certainly to be signed by early subsequent 12 months, the supply mentioned.
Walgreens and Sycamore declined to remark.
Shares of the second-largest U.S. pharmacy chain operator surged about 18% following the information.
If the talks are profitable, it may very well be Sycamore’s largest deal after Walgreens’ market capitalization reached $9 billion following Tuesday’s rally.
In comparability, Silver Lake mentioned in April it was taking expertise and leisure company Endeavor Group Holdings personal for $13 billion, one of many largest personal fairness offers in current occasions.
The pharmacy chain operator additionally had long-term debt of $8.04 billion, as of Aug. 31.
Walgreens had beforehand tried to go personal in 2019 when it was valued at greater than $55 billion however was unsuccessful. Private fairness group KKR had additionally approached the pharmacy chain with a buyout proposal on the time, based on media experiences.
Walgreens’ retail enterprise has struggled with weak shopper spending resulting from sticky inflation and its pharmacy operation has confronted low reimbursement charges for submitting prescriptions.
The firm additionally operates the Boots retail and pharmacy chain within the UK, which it has been seeking to promote for a number of years.
Walgreens noticed a change in administration final 12 months, with CEO Rosalind Brewer abruptly stepping down in September final 12 months. Healthcare trade veteran Tim Wentworth took her place and has since introduced the removing of a number of mid-level executives, a $1 billion cost-cutting plan and closure of 1,200 shops over the subsequent three years.
This 12 months, its inventory has fallen greater than 60% by means of Monday.
Leerink analyst Michael Cherny mentioned he was not stunned with the reported talks as Walgreens has explored plenty of completely different avenues “in what has been a steadily eroding earnings story”.
The Wall Street Journal had first reported the information.
(Reporting by Sriparna Roy and Leroy Leo in Bengaluru and Anirban Sen in New York; Editing by Shailesh Kuber and Krishna Chandra Eluri)
