Will Sycamore's hundred billion takeover of Walgreens (WBA.US) result in the century-old pharmacy giant being split up or delisted?

According to informed sources, private equity firm Sycamore Partners is set to acquire Walgreens Boots Alliance (WBA.US), a deal that could end the tumultuous journey of this retail pharmacy giant, which has been a public company for over 120 years. Both parties are making final preparations for the deal, which could be announced as early as this week. As previously reported, Sycamore is set to finalize a deal to acquire Walgreens for cash at a price range of $11.30 to $11.40 per share, with the total deal size estimated at around $10 billion. The above-mentioned sources state that the acquisition may lead to a breakup of Walgreens, whose businesses include the UK pharmacy chain Boots and the American healthcare provider VillageMD, which is one of the options being discussed. Privatization would mark the pinnacle of Walgreens Chairman Stefano Pessina's efforts to rescue his pharmacy empire. Pessina is known as a serial dealmaker, having merged his Alliance Boots with Walgreens in 2014 in an attempt to create a global pharmacy giant. However, the returns from this deal were short-lived, as the company's stock price has been declining for most of the past 10 years. In the past 12 months, Walgreens' stock price has fallen by over 50%, with the company's market value currently around $8.9 billion. Reports at the end of February indicated that Sycamore's offer was low, causing the company's stock price to plummet once again. Sources state that as part of the deal, Pessina may sell his stake in Walgreens. Although negotiations are in the final stages, the deal could still be delayed or fall through. Due to the sensitive nature of the information involved, the sources requested anonymity. Representatives from Sycamore and Walgreens declined to comment. In addition, Walgreens also owns the chain of pharmacies Duane Reade, the specialty pharmacy group Shields Health Solutions, and the beauty brands NICE! and Soap & Glory. Over the years, the company has struggled due to industry pressures on prescription reimbursement rates and competition from online retailers like Amazon.com, Inc. In July 2020, the company invested in a partnership with VillageMD to enter the patient care field, further exacerbating its difficulties. Analysts believe that the company's diversified portfolio poses a challenge to the privatization deal, as it would require splitting the company in any transaction. However, Sycamore is known for its complex structured investments in distressed retailers and consumer goods companies, so they may consider taking similar measures with Walgreens. Meanwhile, another option that has been reported is refinancing Walgreens' debt, tying it to certain divisions rather than the entire company. It is worth mentioning that Walgreens had considered privatization before. In 2019, KKR & Co (KKR.US) engaged with Walgreens to discuss a potential deal, which would have been the largest leveraged buyout in history. However, negotiations led by then-CEO Pessina ultimately fell through.