Walgreens considering biggest buyout in history
Walgreens could go private in a bid to save the struggling business
Walgreens Boots Alliance is exploring the possibility of taking the drugstore company private, in what could be the largest leveraged buyout in history.
According to an article on Reuters Walgreens has been in talks with some of the world’s largest private equity firms.
The US-listed global drugstore group has enlisted the help of investment bank Evercore Partners Inc to create a suitable deal, according to sources.
With a market value of $55bn (£42.6bn, €49.6bn) and around $15bn of debt, this would make a take-private of the company the largest buyout in history. The current record stands with energy company TXU, which was sold for $45bn to KKR & Co and TPG in 2007.
Walgreens Boots is the largest retail pharmacy in the US and Europe, with more than 18,750 stores in 11 countries. It operates Walgreens and Duane Reade stores in the US and Boots in Europe and Asia.
However, with Walgreens share price down nearly 40 per cent since last December, investors are reportedly hesitant to strike a deal. The company is under pressure from online competitors including Amazon.com and has been looking at ways to cut costs.
According to its 2019 report, operating income in fiscal 2019 was $5bn, a decrease of 20.5 percent from the prior year, while its adjusted operating income was $6.9bn, a decrease of 9.6 percent.
In a bid to save $1.5bn a year by 2022 it has closed 200 Walgreens stores, 150 in-store clinics and 200 Boots stores.
If Walgreens decides to pursue the idea of a buyout its chief executive Stefano Pessina could roll his equity into the deal to help finance the transaction. With a 16 per cent share, he is the company’s largest shareholder.
Walgreens shares rose 4 per cent on Tuesday afternoon trading in New York, when the news of a possible buyout broke.