A New Chapter for Walgreens as It Exits Public Markets

After nearly a century as a publicly traded company, Walgreens Boots Alliance has concluded its stock market journey. The landmark acquisition by private equity firm Sycamore Partners, valued at approximately $10 billion, was finalized on August 28, delisting the iconic pharmacy chain from the Nasdaq.

Shareholders received a cash payment of $11.45 per share, representing a significant 29% premium over the stock price from December 2024. An additional incentive of up to $3 per share is contingent on the successful divestiture of healthcare divisions, including VillageMD and Summit Health.

Financial Pressures Prompt Radical Change

The decision to go private follows a period of substantial financial difficulty for the retailer. The company reported a staggering $8.6 billion loss for 2024, nearly triple the deficit from the previous year. This performance precipitated a dramatic erosion of market value, which collapsed from a peak exceeding $100 billion in 2015 to less than $8 billion at the time of the acquisition.

Analysts point to two primary factors behind this decline: persistently shrinking pharmacy margins and a series of unsuccessful forays into the broader healthcare sector. The $9 billion acquisition of VillageMD, in particular, failed to deliver the anticipated financial returns, contributing to the company’s challenges.

Should investors sell immediately? Or is it worth buying Walgreens Boots Alliance?

Leadership Shake-Up and Corporate Breakup

Sycamore Partners moved swiftly to install new leadership, naming Mike Motz as the new CEO. He replaces Tim Wentworth and brings experience from his tenure leading Staples US Retail, where he oversaw the closure of one-third of the office supply chain’s locations.

A radical restructuring plan is now underway. The conglomerate will be split into five distinct, independently operating businesses:
– Walgreens (U.S. Pharmacy Operations)
– The Boots Group (International Business)
– Shields Health Solutions (Specialty Pharmacies)
– CareCentrix (Post-Acute Care)
– VillageMD (Primary Care Practices)

Store Closures and Leveraged Buyout Concerns

A pre-existing plan to reduce the company’s physical footprint is being accelerated, with 1,200 of its 8,500 stores slated for closure. Given Mike Motz’s track record at Staples, industry observers anticipate this downsizing could intensify under the new ownership.

The structure of the acquisition itself has drawn scrutiny from market critics. The deal is 70% debt-financed, raising concerns that the substantial debt burden could lead to further aggressive cost-cutting measures, including additional job losses and store shutdowns, as the new owners seek to service the leveraged buyout.