Walgreens Boots Alliance enters into definitive agreement to be acquired by Sycamore Partners

Walgreens Boots Alliance announced it has entered into a definitive agreement to be acquired by an entity affiliated with Sycamore Partners, a private equity firm specializing in retail, consumer and distribution-related investments. The total value of the transaction represents up to $23.7 billion. Sycamore will pay $11.45 per share, a premium of 8% to the stock’s closing price of $10.60 on the day of the announcement. Walgreens shareholders could also receive an additional $3 in cash from future monetization of the company’s debt and equity interests in VillageMD.

Sycamore Partners specializes in consumer, distribution and retail-related investments and partners with management teams to improve the operating profitability and strategic value of their business. With approximately $10 billion in aggregate committed capital raised since its inception in 2011, Sycamore Partners’ investors include leading endowments, financial institutions, family offices, pension plans and sovereign wealth funds.

Walgreens Boots Alliance has struggled in the past decade, as the company’s market value shrunk to just more than $9 billion from almost $100 billion as margins on drug prices fell and consumers shifted to cheaper rivals Amazon , Target, and Walmart to fill their prescriptions and purchase toiletries. Walgreens has shuttered hundreds of stores from its 8,900 sore peak.

According to a company press release, leveraging WBA’s healthcare expertise and Sycamore’s established leadership in retail and consumer services, WBA will be better positioned to become the first choice for pharmacy, retail and health services. The company will continue to operate under Walgreens, Boots and its trusted portfolio of consumer brands. WBA will maintain its headquarters in the Chicago area.

“Throughout our history, Walgreens Boots Alliance has played a critical role in the retail healthcare ecosystem,” said Tim Wentworth, CEO, Walgreens Boots Alliance. “We are focused on making healthcare delivery more effective, convenient and affordable as we navigate the challenges of a rapidly evolving pharmacy industry and an increasingly complex and competitive retail landscape. 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. The WBA Board considered all these factors in evaluating this transaction, and we believe this agreement provides shareholders premium cash value, with the ability to benefit from additional value creation going forward from monetization of the VillageMD businesses.”