Walgreens Set to Transition to Private Ownership Following $10 Billion Agreement with Sycamore Partners

Walgreens Boots Alliance Inc. WBA saw a notable increase of over 7% in premarket trading on Tuesday, as it nears an agreement with private-equity firm Sycamore Partners to take the company private.

Details of the Deal: The agreement is reportedly valued at approximately $10 billion, according to a report from the Wall Street Journal. Both Walgreens and Sycamore aim to finalize the transaction by Thursday, assuming there are no last-minute hitches.

Negotiations have focused on a cash payment range of $11.30 to $11.40 per share from Sycamore Partners. Additionally, the deal might include contingent value rights, which would offer further compensation to shareholders if Walgreens meets specific performance targets post-acquisition.

Should Sycamore Partners successfully purchase Walgreens entirely, they plan to keep the core U.S. retail operations while potentially selling off or publicizing other segments of the company.

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Importance of the Agreement: The Wall Street Journal reported in mid-December that Sycamore Partners was evaluating the acquisition of Walgreens as part of an effort to modernize the pharmacy chain amid nearly ten years of declining stock values.

Market Performance: On Monday, Walgreens stock dipped by 3.93%, underperforming compared to the 2.76% decline in the Fidelity NASDAQ Composite Index ETF ONEQ. However, it rebounded with a 7.12% increase in premarket trading on Tuesday.

On a year-to-date basis, Walgreens remains 11.64% higher, yet it has suffered a steep decline of 50.15% over the past year.

Analysts tracked by Benzinga suggest a consensus price target of $20.82 for Walgreens stock, indicating a “sell” rating. Predictions vary significantly between $7 and $54. Recent evaluations from Deutsche Bank and Truist Securities average out to $11.33, pointing to a potential upside of 5.04%.