Walgreens shares pop on report pharmacy chain could sell itself to PE firm Sycamore

Shares of Walgreens jumped about 20% on Tuesday on a report that the company is in talks to sell itself to private equity firm Sycamore Partners. 

Walgreens and Sycamore have been discussing a deal that could be completed early next year, The Wall Street Journal reported, citing people familiar with the matter. New York-based Sycamore would likely sell off pieces of Walgreens’ business or work with partners, the Journal reported.

A Walgreens spokesperson declined to comment on the reported talks.

The report comes during a rough period for the retail pharmacy giant. The company’s stock was down more than 60% for the year before its climb Tuesday.

Walgreens – squeezed by the transition out of the Covid pandemic, a leadership shakeup, pharmacy reimbursement headwinds and its wobbly push into health-care – has underperformed Wall Street’s earnings expectations for two straight quarters. Walgreens’ pharmacy business in particular has been flailing due to falling reimbursement rates for prescription drugs and several factors pressuring the front of the store, such as inflation and increased competition.

The company is trying to regain its footing with a new CEO, health-care industry veteran Tim Wentworth. Since stepping into the role in October last year, Wentworth has moved to slash costs at Walgreens.

In October, Walgreens said it plans to close roughly 1,200 of its drugstores over the next three years, which includes 500 in fiscal 2025 alone. Walgreens has around 8,700 locations in the U.S., a quarter of which it says are unprofitable. The company has also scaled back its push into primary care by cutting its stake in primary-care provider VillageMD. 

Walgreens has reportedly been seen as a potential private equity target in the past. 

In 2019, private equity firm KKR made a roughly $70 billion buyout offer to the company, the Financial Times and Bloomberg reported at the time.