- Walgreens was worth over $100billion soon after it merged with Boots in 2014
- Sycamore bought the US-based office supply retailer Staples in 2017 for $7bn
The owner of high street chain Boots has agreed to be taken private in a deal worth up to $23.7billion (£18.4billion).
Walgreens Boots Alliance said private equity firm Sycamore Partners plans to pay its investors $11.45 (£8.86) per share.
Sycamore will hand out a further $3 per share (£2.32) dependent on the disposal of Walgreens’ primary care business, VillageMD, which includes its Village Medical, Summit Health and CityMD segments.
The transaction represents a 29 per cent premium to Walgreens’ share price in mid-December, just before the first reports of a deal were announced.
Walgreens was worth over $100billion soon after the company bought the remaining stake it did not own in Boots in 2014, having purchased a 45 per cent stake two years earlier.
However, the Illinois-based group’s value has since plunged by 90 per cent amid rising costs, heightened competition from online firms, and low prescription drug reimbursement rates.
Acquisition: Walgreens Boots Alliance, the owner of high street chain Boots, has agreed to be taken private in a deal worth up to $23.7billion (£18.4billion)
Three years ago, Walgreens began a strategic review of its Boots business amidst a renewed focus on its US healthcare operations.
Indian conglomerate Reliance Industries and American investment giant Apollo Global Management considered a joint bid for Boots.
Walgreens decided to retain control of the high street brand, saying potential buyers were unable to raise sufficient funds following an ‘unexpected and dramatic change’ in global financial markets.
Tim Wentworth became chief executive of Walgreens in 2023, but the company has continued to struggle, recording a massive operating loss of $14.2billion last year.
To reduce costs, it has slashed dividend payouts, cut its holding in drug wholesaler Cencora, and announced plans to shut 1,200 stores over the coming three years.
Wentworth said: ‘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.
‘Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds.’
Founded in 2011, Sycamore specialises in retail and consumer investments, buying the US-based office supply retailer Staples in 2017 for $7billion.
Russ Mould, investment director at AJ Bell, believes the group is unlikely to hold onto Boots if it completes the acquisition of Walgreens.
He added: ‘Boots is a well-loved brand and could attract a lot of attention if it did list on the UK stock market.
‘However, the retail sector faces considerable headwinds from higher employment costs and a potential dip in consumer confidence.
‘Therefore, it might be better to wait until the outlook improves before pursuing a listing, should Sycamore go down the IPO demerger route.’
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .