Walgreens Embarks on New Journey with Sycamore Partners
In a monumental shift, the iconic drugstore chain Walgreens has decided to go private, marking a significant chapter in its storied history. The company, which has been facing challenges in recent years, has struck a deal with private equity firm Sycamore Partners for a whopping $10 billion.
The agreement entails Sycamore paying $11.45 per share in cash for Walgreens, a move that offers shareholders an 8% premium to the stock’s closing price. Additionally, there is potential for shareholders to receive up to $3 more per share from future sales of Walgreens’ primary-care businesses, such as Village Medical, Summit Health, and CityMD. With debt and potential payouts factored in, the total value of the transaction could reach a substantial $23.7 billion.
The timeline for the completion of this transformative deal is set for the fourth quarter of this year, bringing an end to Walgreens’ tenure as a public company, which commenced in 1927. Despite a recent uptick in stock performance, with shares up over 15% in 2025, the company has faced significant declines in previous years, including a staggering 70% drop over the past three years.
Walgreens’ CEO, Tim Wentworth, expressed optimism about the move, emphasizing the need for a shift in focus to drive meaningful change. Wentworth stated, “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.” The sentiment was echoed by Stefan Kaluzny, managing director of Sycamore Partners, who highlighted the firm’s confidence in Walgreens’ pharmacy-led model and its critical role in patient care.
Maintaining its headquarters in Chicago, Walgreens boasts a global workforce of over 310,000 employees and operates 12,500 retail pharmacy locations across the United States, Europe, and Latin America. The company remains committed to its upcoming second-quarter earnings release on April 8.
The Rise and Fall of Walgreens in a Changing Retail Landscape
Once a retail giant with a market cap exceeding $100 billion in 2015, Walgreens faced a tumultuous decline in subsequent years, culminating in a market cap plummeting to under $8 billion in late 2024. Intense competition from rivals like CVS, grocery chains, big-box retailers, and e-commerce behemoth Amazon, coupled with various industry challenges, contributed to the company’s struggles.
The shifting dynamics of the retail pharmacy sector forced both Walgreens and CVS to reevaluate their strategies, leading to a significant reduction in store count to bolster profitability. While CVS diversified its offerings by delving into insurance and pharmacy benefits, Walgreens chose to focus primarily on its retail pharmacy business, a decision that proved challenging in the evolving landscape.
Walgreens’ recent announcement of closing approximately 1,200 stores over the next three years, including 500 by the end of fiscal 2025, underscores the company’s efforts to streamline operations. With around 8,700 locations in the U.S., a quarter of which are deemed unprofitable, Walgreens has also scaled back its foray into primary care by reducing its stake in provider VillageMD.
The appointment of Tim Wentworth, a seasoned healthcare industry executive, as CEO in late 2023 signaled Walgreens’ commitment to navigating through turbulent times. Evidently, the company’s resilience and adaptability have positioned it as a compelling target for private equity firms, as evidenced by past interest from the likes of KKR in 2019.
As Walgreens embarks on this transformative journey with Sycamore Partners, the healthcare landscape awaits the unfolding of a new chapter in the company’s evolution, marked by strategic shifts and a renewed focus on value creation.
This article highlights the significant developments surrounding Walgreens’ transition to private ownership, shedding light on the broader implications for the retail pharmacy industry and the company’s future trajectory.
