Shares of Walgreens Boots Alliance (NASDAQ:WBA) saw a 4% increase following reports that Sycamore Partners is securing bank financing for a potential acquisition exceeding $10 billion. According to Sky News, the private equity firm is in discussions with a group of lenders including Bank of America (NYSE:BAC), JP Morgan, and Wells Fargo (NYSE:WFC) to arrange debt funding for the purchase of the prominent retail pharmacy company.
The potential deal would transition Walgreens Boots Alliance from a public entity to a private one and could lead to the future sale of Boots, the UK-based chain that operates approximately 1,900 stores and employs over 50,000 people. Speculation suggests that Stefano Pessina, who has orchestrated numerous significant transactions for Boots over the years, could become the majority owner of the British retailer following the acquisition.
Sycamore Partners is also expected to divest VillageMD, a network of clinics staffed by doctors, which Walgreens had already been contemplating as a separate business move. The Wall Street Journal reported on Tuesday that discussions between Sycamore Partners and WBA were underway, which contributed to a rebound in WBA's market value. The company's value had dipped below $8 billion in recent months before recovering amid the acquisition talks.
Pessina, who owns an approximate 17% stake in WBA, may solidify his position as the primary owner of Boots, depending on the final structure of the Sycamore deal. This news comes after Walgreens halted previous attempts to sell Boots, having concluded that proposals, including those from Apollo Global Management (NYSE:APO), did not meet their valuation expectations.
The potential change in ownership occurs as Boots welcomes a new leader following the departure of its long-standing managing director, Seb (EPA:SEBF) James, who left for another opportunity in the healthcare sector. Boots has a long-standing history, tracing back to its establishment by John Boot in 1849 as a herbal remedies shop in Nottingham.
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