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Walgreens Explores Becoming Private in What May Be the Largest LBO Ever

Walgreens is testing a health-focused concept at a store in Deerfield, Illinois.


International drugstore chain Walgreens Boots Alliance investigates becoming private in what could mark the biggest buy-in in history, people familiar with

One of the companies looking at the deal is KKR , people say. KKR has a history with the retailer. In 2007, it acquired Alliance Boots in partnership with Stefano Pesina, then the executive chairman of Alliance Boots and other investors.

KKR remained an investor after Walgreens announced a two-part deal to acquire Alliance Boots in 201

2, at the time Walgreens acquired all Alliance boots, in 2015, KKR roughly tripled its cash investment, according to media reports at this time.

For the Walgreens Boots Alliance the deal to become private will be a chance to get out of the spotlight. Walgreens shares have fallen about 22% over the past 12 months, as both retailers and pharmacists are under pressure.

With a market capitalization of Walgreens of about $ 55 billion, such a deal will require a big payday. Pesina, now Walgreens CEO, has an approximately 16% stake in the company, according to data collected by FactSet.

Walgreens' outstanding debt of approximately $ 17 billion, according to its most recent regulatory documentation, could further complicate the acquisition talks. A number of retailer-led buying transactions led by private equity firms in recent years have led to bankruptcy, including Toys R Us and Payless. These retailers found themselves stuck in debt and failed to make the investment they needed to compete against the backdrop of the rapidly changing retail landscape.

Walgreens – one of the largest pharmacies in the world with about 9,300 drugstores – is under its own pressure. Consumers are increasingly shopping for drugstore clips such as shampoo and vitamins online.

In response, Walgreens reduces costs. The company aims to slash more than $ 1.8 billion in fiscal 2022. Walgreens earlier this year said it would close about 200 stores in the US, in addition to 200 that will close in the UK

challenges facing the industry, Walgreens' peers have explored partnerships or consolidation. CVS Health and Aetna last year merged into a $ 69 billion deal that combines CVS's pharmacy and pharmacy management benefits platform with Aetna's insurance business.

Walgreens examined a deal to buy AmerisourceBergen last year, but these studies were initially completed without

In 2015, Walgreens tried to acquire Rite Aid in a $ 17.5 billion deal that seemed to bring with it myself 4600 stores. But regulators cut the deal to buy 1932 stores for $ 4.37 billion.

Walgreens is working with Evercore Investment Bank to investigate whether it can make a deal, Reuters reported earlier on Tuesday. Reuters and Bloomberg previously reported news of a potential deal, sending more than 3% stake.

The stock closed on Tuesday at $ 61.21, up 2.6%.

Walgreens declined comment Tuesday, saying it did not comment on rumors or speculation. .

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