Walgreens Going Private in $10 Billion Buyout

Walgreens, one of the most recognizable names in American retail pharmacy, is going private after nearly a century as a publicly traded company. The struggling drugstore chain announced on Thursday that it has reached a deal with private equity firm Sycamore Partners in a transaction valued at up to $23.7 billion, including debt. The deal will take Walgreens off the stock market at an equity value of around $10 billion, with Sycamore paying $11.45 per share in cash. Shareholders may also receive up to $3 more per share depending on future sales of Walgreens' primary-care businesses.

This move marks the end of Walgreens' tumultuous journey as a public company, which began in 1927. Once a retail powerhouse with a market cap surpassing $100 billion in 2015, Walgreens has struggled in recent years, losing ground to competitors like CVS, Amazon, and grocery store pharmacies. Its stock has plunged by 70% over the past three years, and by the end of 2024, its market cap had dropped below $8 billion.

Why Is Walgreens Going Private?

The decision to take Walgreens private reflects the challenges it has faced in recent years, including:

• Increased Competition: The pharmacy industry has undergone significant shifts, with CVS expanding into insurance and pharmacy benefits, while Amazon and big-box retailers like Walmart continue to eat into Walgreens’ market share.
• Retail Struggles Post-Pandemic: The transition away from COVID-era demand has hurt Walgreens’ revenue, especially as reimbursement rates for prescription drugs have tightened.
• Failed Healthcare Expansion: Walgreens attempted to diversify into primary care through investments in VillageMD, Summit Health, and CityMD, but these efforts have not delivered the expected returns.
• Shrinking Footprint: In October 2023, Walgreens announced it would close 1,200 stores over three years, including 500 in fiscal 2025, as part of an effort to cut losses and focus on profitability.

A Private Equity Play for Turnaround

For Sycamore Partners, known for its expertise in retail turnarounds, this acquisition is a bet that Walgreens can still be revived. Sycamore’s managing director, Stefan Kaluzny, expressed confidence in Walgreens’ "pharmacy-led model and essential role in driving better outcomes for patients, customers, and communities."

Walgreens CEO Tim Wentworth, who took over in 2023, also emphasized that the transition to private ownership will allow for a more focused and long-term approach to restructuring. “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,” Wentworth stated.

What’s Next for Walgreens?

Despite going private, Walgreens will maintain its headquarters in Chicago and continue to operate its extensive network of 12,500 retail pharmacy locations across the U.S., Europe, and Latin America. However, with a quarter of its U.S. locations currently unprofitable, further store closures and operational shifts are likely under Sycamore’s ownership.

Walgreens’ fate will largely depend on its ability to carve out a sustainable niche in an increasingly competitive sector. Unlike CVS, which has successfully expanded into healthcare services, Walgreens remains heavily reliant on its retail pharmacy business—an area that has faced relentless margin pressure.

The Bigger Picture

The Walgreens deal also reflects a broader trend of struggling retail companies being acquired by private equity firms in hopes of executing turnaround strategies outside the pressures of public markets. Walgreens was previously seen as a private equity target, with KKR making a $70 billion buyout offer in 2019—a stark contrast to its current valuation.

As Walgreens prepares to go private by the fourth quarter of 2025, investors and industry analysts will be watching closely to see if Sycamore can breathe new life into a brand that once stood as a symbol of American retail pharmacy dominance. Whether this move marks the beginning of a successful reinvention or a slow decline remains to be seen.