Sycamore Partners Completes Walgreens Acquisition, Splits Company into Five Entities

Private equity firm Sycamore Partners completed its acquisition of Walgreens Boots Alliance on Thursday, immediately restructuring the retail pharmacy giant into five independent companies: Walgreens, The Boots Group, Shields Health Solutions, CareCentrix and VillageMD. The deal, valued at $11.45 per share or approximately $10 billion in equity value, marks the end of Walgreens' tenure as a publicly traded company on the Nasdaq.

Mike Motz assumes the CEO role at Walgreens, bringing experience from his previous positions as CEO of Staples US Retail and president of Shoppers Drug Mart. He replaces Tim Wentworth, who will continue as an ongoing director. John Lederer, a former Walgreens Boots Alliance director and Senior Advisor to Sycamore, becomes Executive Chairman.

"Today represents an exciting new chapter and a turning point for Walgreens," Motz said in a statement. "As a private organization, alongside our dedicated team members, we are renewing our focus on our core pharmacy and retail platform, our stores and our customer experience—building on the progress that's been made."

The acquisition comes as Walgreens has faced significant financial challenges. The company reported full-year fiscal 2024 sales of $147.7 billion, representing 6.2% growth, but accumulated $8.6 million in losses—a 180% increase from 2023. The healthcare segment, particularly VillageMD, has weighed heavily on performance, contributing to a $6 billion loss in the second quarter of 2024.

Shareholders who approved the deal in July receive $11.45 per share in cash, plus one non-transferable right to receive up to an additional $3.00 per share from future monetization of the company's debt and equity interests in VillageMD. The VillageMD portfolio encompasses Village Medical, Summit Health and CityMD businesses, acquired in 2022 for nearly $9 billion.

Stefan Kaluzny, managing director of Sycamore, said, "Walgreens Boots Alliance, Inc., its companies and its dedicated team members play an essential role in the communities they serve around the world. We look forward to partnering with the management teams at each company, including Walgreens, The Boots Group, Shields Health Solutions, CareCentrix and VillageMD. As standalone companies under private ownership, they will build on their proud legacies to enhance the customer experience and deepen the trusted relationships they have earned with millions of customers around the world."

The restructuring aligns with Walgreens' ongoing turnaround efforts, which included plans announced last October to close 1,200 stores. Sycamore has indicated its intention to explore options for VillageMD's future, forming a committee to evaluate various avenues for improving the primary care provider's financial performance.

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