Walgreens Boots Alliance sold to private equity firm - will Boots get the boot?

US pharmacy giant Walgreens Boots Alliance is going private. Will the new owners sell off the high-street chemist?

Shoppers and visitors out on Oxford Street pass Boots the chemist
(Image credit: Mike Kemp/In Pictures via Getty Images)

Recently, Walgreens Boots Alliance struck a deal with private-equity group Sycamore Partners that will “bring the struggling pharmacy chain’s century-long run as a public company to an end”, says the Financial Times. Sycamore agreed to pay $11.45 a share, a premium of almost 30% to the price before news of a possible deal emerged in December. Sycamore is valuing the business, including its debt, at $23.7 billion. Billionaire Stefano Pessina, Walgreens’ executive chairman and largest shareholder, will maintain a “sizeable minority shareholding” in the business.

Despite retaining a stake, the deal is a blow for Pessina. He “spent half a century building a pharmacy behemoth that stretches almost three times further than the Roman empire ever did”, says Benjamin Katz in The Wall Street Journal. After turning around and expanding his father’s “fledgling and failing pharmaceutical wholesaler”, he merged it with UniChem in 1997 and bought Boots in 2006. That combination was in turn acquired by Walgreens in 2014, creating a conglomerate with a peak market value in excess of $100 billion. However, it struggled with Amazon “quickly eating into drugstores’ non-medical revenues”. This forced it to cancel its dividend and slash the store’s portfolio.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

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