(Bloomberg) — Sycamore Partners is in talks to buy struggling drugstore chain Walgreens Boots Alliance Inc. to take over, according to people familiar with the matter.
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The New York-based private equity firm is in ongoing discussions about a deal to take Walgreens private, said the people, who asked not to be identified because the details are not public. It is possible that discussions could collapse without a deal being reached, the people added.
The stock rose as much as 28% after the news, which was first reported by the Wall Street Journal. That was the biggest single-day gain since at least 1980. Walgreens shares had lost two-thirds of their value over the year through Monday. That’s the worst performance of any stock in the S&P 500.
Representatives for Walgreens and Sycamore Partners declined to comment.
In October, the pharmacy chain said it would close about 1,200 outlets over the next three years after posting a $3 billion loss in the fourth quarter due to costs related to opioid liabilities and the write-off of an investment in China. The company’s retail division has struggled with the rise of online retailers like Amazon.com and discount giants Dollar General and Costco.
Walgreens has been a take-private candidate for years. KR & Co. formally approached the drugstore giant about a deal in 2019 in partnership with current chairman and largest shareholder Stefano Pessina, when the company had a market value of $56 billion. Sycamore Partners has a history of acquiring retailers that have seen better days, including office supplier Staples Inc. and department store chain Belk Inc.
–With help from Gillian Tan and Cynthia Koons.
(Updates with confirmation of conversations in first paragraph, additional details throughout.)
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