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Investing.com-- Walgreens Boots Alliance Inc (NASDAQ:WBA) is close to finalizing a deal with private equity firm Sycamore Partners that would take the struggling drugstore chain private in a transaction valued at around $10 billion, according to a Monday report from the Wall Street Journal, citing sources familiar with the matter.
The agreement could be completed as soon as Thursday, barring any last-minute complications, the report said.
Walgreens shares jumped more than 5% in premarket trading Tuesday.
Sycamore is expected to pay between $11.30 and $11.40 per share in cash, with potential additional value tied to performance-based targets, the report stated.
If the deal proceeds, Sycamore is likely to retain Walgreens’ core U.S. retail operations while selling off or taking public other parts of the company, the WSJ report said.
Analysts at Leerink Partners said they have previously run analyses on a leveraged buyout (LBO) "of the entire WBA entity at $12 and had trouble getting to a solid return, and note that the reported takeout price is below these levels."
"As always, we take these reports with a grain of salt and continue to see WBA as having an uncertain path forward, either as a public or private entity. We would also expect, in the event of any deal, that there would likely be a reasonable spread, even if this would not be a strategic transaction," they added.
Once a dominant force in U.S. retail pharmacy, Walgreens’ market value has fallen from over $100 billion in 2015 to below $8 billion in late 2024. The company has struggled with shrinking margins in its prescription business and an unsuccessful expansion into primary care.
Under CEO Tim Wentworth, Walgreens has been closing underperforming stores while seeking to stabilize its retail operations, the report stated.
Sycamore, known for its retail-focused investments, previously acquired Staples in 2017.
Ayushman Ojha contributed to this report.