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A buyout of Walgreens Boots Alliance would set the stage for a three-way break-up of the US pharmacy chain, with executive chair Stefano Pessina maintaining a significant shareholding as part of the deal.
The financing for potentially taking the troubled retailer private is not anticipated to be an obstacle, said people familiar with matter, after weeks of on-off deal discussions with New York-based Sycamore Partners, an investment group known for targeting troubled retailers.
While the company would initially be taken private as a whole, Sycamore plans to separate Walgreens’ three main businesses into their own units with distinct capital structures, the people said. The company’s structure gives the buyer flexibility to prise apart US pharmacy retailer Walgreens, UK chemist and retail group Boots and speciality pharma unit Shields Health Solutions into independent businesses.
Talks have been complicated by volatility in the share price of Walgreens. After news of the talks first broke in December, shares surged but have since fallen back to give the company a market capitalisation of about $9.5bn. The talks could still fall apart in the coming weeks, people close to the discussion warned.
Sycamore and Pessina declined to comment. Walgreens did not immediately respond to a request for comment.
Shares in Walgreens, which had a market value of more than $100bn in 2015, have plunged as competitors chipped away at its business. The group said in October that it would close 1,200 stores in the coming years as it reported a nearly $9bn net loss for its 2024 fiscal year.
Pessina, who was previously chief executive of the business, owns nearly 17 per cent of Walgreens after selling his Alliance Boots business to the US pharmacy group in 2014. He has sought to find a solution for the group’s plunging share price and has been key to the talks, some of the people said.
