The Latest Rumors: Is Walgreens Up for Sale to a Private Equity Firm?
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Speculation surrounding the potential sale of Walgreens to a private equity firm is heating up once again. CNBC’s David Faber recently stirred the rumors back to life, suggesting that New York-based private equity firm Sycamore Partners may be eyeing the pharmacy chain for acquisition. Faber’s comments have caused Walgreen’s stock to surge, with shares rising 14% on the news, as reported by Bloomberg. Sycamore Partners specializes in retail and consumer investments, making them a potential suitor for Walgreens.
Despite the buzz, Walgreens has refrained from commenting on the speculation, maintaining their stance of not addressing rumors.
Why It Matters
If a deal were to go through, Sycamore could potentially look to sell off certain health units, such as VillageMD, as part of the acquisition strategy. Another possibility could involve refinancing Walgreens’ debt in a way that isolates certain units from the overall company, according to Seeking Alpha.
The Larger Trend
Last month, talks of a potential deal seemed to have fizzled out. Walgreens CEO Tim Wentworth did not touch upon the matter during the company’s Q1 earnings call in January. However, reports from The Wall Street Journal in December initially sparked the rumors of Sycamore’s interest in taking Walgreens private.
In its first fiscal quarter ending November 30, Walgreens reported a loss of $265 million, a significant drop from the $67 million net loss recorded in the same period the previous year. Adjusted operating income also saw a decline from $687 million to $539 million year-over-year. The decrease in operating income can be attributed to higher costs related to the Footprint Optimization Program in the U.S. Retail Pharmacy segment, as well as lower U.S. retail sales and expenses related to growth in the U.S. Healthcare segment.
As the speculation surrounding a potential acquisition by Sycamore Partners continues to swirl, the future of Walgreens remains uncertain. Stay tuned for further updates on this developing story.
Email the writer: SMorse@himss.org
