Shares of Walgreens rose about 20% on Tuesday to a report that the corporate is in talks to sell to personal equity firm Sycamore Partners.
Walgreens and Sycamore have discussed a deal that might close early next 12 months, the Wall Street Journal reported, citing people acquainted with the matter. New York-based Sycamore would likely sell parts of the Walgreens business or work with partners, the Journal reported.
A Walgreens spokesman declined to comment on the reported conversations.
The report comes at a difficult time for the pharmacy giant. The company's shares fell greater than 60% for the 12 months before rising on Tuesday.
Walgreens — under pressure from the transition out of the Covid pandemic, a leadership change, pharmacy reimbursement headwinds and its shaky foray into health care — fell in need of Wall Street's earnings expectations for 2 straight quarters. In particular, Walgreens' pharmacy business is weakening as prescription drug reimbursement rates decline and multiple aspects, resembling inflation and increasing competition, put pressure on its stores.
The company is attempting to regain its footing with a brand new CEO, healthcare industry veteran Tim Wentworth. Since taking office in October 2023, Wentworth has been committed to reducing costs at Walgreens.
In October, Walgreens announced that it plans to shut around 1,200 of its drugstores over the subsequent three years, including 500 in fiscal 12 months 2025. Walgreens has around 8,700 locations within the US, 1 / 4 of that are unprofitable. The company also scaled back its push into primary care by reducing its stake in primary care provider VillageMD.
Walgreens has reportedly been considered a possible private equity goal prior to now.
In 2019, private equity firm KKR took stock Acquisition valued at $70 billion Offer to the corporate, the Financial Times and Bloomberg reported on the time.
image credit : www.cnbc.com