Private Equity’s $24 Billion Walgreens Bid Is Wild
Buyout shop Sycamore has made a massive bid for the storied pharmacy chain. It’s a banner deal. But why isn’t it going to a bigger private equity name?
A PE deal for Walgreens offers a chance for shareholders to be put out of their misery.
Photographer: Justin Sullivan/Getty Images North AmericaThe deal just announced for Walgreens Boots Alliance Inc. is above all a massive transaction. But its size relative to the buyer — the low-profile private equity firm Sycamore Partners — is equally stunning. The days of “Sycamore who?” are over.
Walgreens’ market value had shrunk to less than $8 billion from more than $100 billion in the past decade before Sycamore’s interest emerged in December. The pharmacist has endured myriad problems, which are ongoing. Selling consumer health care products from stores is a low-growth business facing competition from Amazon.com Inc. and WalMart Inc. Those challenges are exacerbated by high theft rates. And Walgreens’ foray into health care services, providing access to physicians in clinics, has proved a costly mistake.