Walgreens Stocks Soar 20% on Report of Potential Sale to Sycamore Partners
Shares of Walgreens jumped about 20% on Tuesday after reports emerged that the company is in talks to sell itself to private equity firm Sycamore Partners. According to The Wall Street Journal, Walgreens and Sycamore have been discussing a deal that could be completed early next year.
Under the proposed deal, Sycamore would likely sell off pieces of Walgreens’ business or work with partners. The news comes as Walgreens struggles to regain its footing after a tough year, with its stock down more than 60% for the year.
Walgreens has faced challenges including the transition out of the Covid-19 pandemic, leadership shakeups, and pharmacy reimbursement headwinds. The company has also been working to correct its pharmacy business, which has been hampered by falling prescription drug reimbursement rates and increased competition.
Recently, Walgreens has been trying to regain its footing with new CEO Tim Wentworth, who has been working to slash costs and streamline operations. The company has announced plans to close around 1,200 of its drugstores over the next three years, including 500 in fiscal 2025 alone. This is part of a broader effort to eliminate around 25% of its unprofitable locations.
Additionally, Walgreens has been scaling back its push into primary care by cutting its stake in primary care provider VillageMD.
Walgreens has been seen as a potential target for private equity firms in the past, with KKR making a roughly $70 billion buyout offer in 2019.