Unlock the Editor’s Digest at no cost
Roula Khalaf, Editor of the FT, selects her favorite tales in this weekly publication.
Walgreens Boots Alliance has struck a deal price up to $23.7bn with private equity group Sycamore Companions that may carry the struggling pharmacy chain’s century-long run as a public firm to an finish.
Sycamore agreed to pay $11.45 a share to take Walgreens private, valuing its inventory at an almost 30 per cent premium to earlier than deal talks have been first reported in December and giving it an equity worth of about $10bn, the pharmacy chain stated on Thursday.
Sycamore is probably going to maintain on to the US retail enterprise and promote or spin off the rest, which incorporates the UK pharmacy chain Boots, as a part of a three-way cut up, the Monetary Occasions beforehand reported.
Walgreens’ shareholders might be paid an additional $3 a share primarily based on the sale of Walgreens’ main care enterprise VillageMD, valuing the enterprise together with debt at as a lot as $23.7bn.
As a part of the deal, Italian billionaire Stefano Pessina, Walgreens’ government chair and largest shareholder, will keep a sizeable minority shareholding in the enterprise.
The take-private transaction will finish Walgreens’ 97-year run as a listed firm. As a part of the settlement, Walgreens could have 35 days to solicit and entertain rivals bids.
Pessina cast Walgreens Boots Alliance by orchestrating a merger of US-based Walgreens with Alliance Boots of Europe in 2014. Previously chief government of the mixed group from 2015 to 2021, he holds a 17 per cent stake in the corporate.
The corporate owns hundreds of shops, together with Walgreens and Duane Reade pharmacies in the US. Its revenues totalled $148bn in its newest fiscal 12 months.
Walgreens’ market worth peaked at greater than $100bn quickly after the 2014 merger closed. However it dwindled to lower than $10bn in the following decade as the corporate spent billions to add drugstores simply as ecommerce ate into gross sales of normal merchandise and pharmacy profit managers have been grinding down reimbursement charges for prescription medicines.
Walgreens in late 2019 turned down a take-private provide from private equity group KKR valuing the enterprise at greater than $70bn.
The corporate expanded into healthcare, spending $5.2bn in 2021 to take a controlling stake in the VillageMD community of primary-care medical doctors’ places of work. VillageMD then paid $8.9bn for Summit Well being-Metropolis MD, a US pressing care and physicians’ group. Walgreens has been attempting to offload VillageMD for greater than a 12 months.
Tim Wentworth, Walgreens’ chief government, stated the corporate’s “formidable turnaround plans” could be simpler to execute as a private firm.
“Sycamore will present us with the experience and expertise of a accomplice with a powerful monitor report of profitable retail turnarounds,” he added.
The corporate stated it might maintain its longtime headquarters in the Chicago area.
The Walgreens’ acquisition represents a giant wager for Sycamore, which has about $10bn of property underneath administration. Sycamore’s marquee deal to date was its $7bn acquisition of workplace provide retailer Staples, which was additionally dropping enterprise to ecommerce rivals.
Sycamore has secured greater than $10bn of debt financing from banks and private credit score lenders, together with Ares Administration, HPS Funding Companions, JPMorgan Chase and Goldman Sachs.
The lenders have dedicated to finance the three particular person models distinctly in a posh transaction, with these lending to the troubled Walgreens US enterprise requiring the corporate to safe its debt towards the worth of inventories, together with prescriptions, an individual acquainted with the matter stated.
Source link
#Private #equity #group #Sycamore #Walgreens #private #24bn #deal
