Walgreens Boots Alliance Shares Rise

Shares of Walgreens Boots Alliance (NASDAQ: WBA) increased by 4% after reports emerged that Sycamore Partners is securing bank financing for a potential acquisition exceeding $10 billion.

According to Sky News, the private equity firm is negotiating with lenders, including Bank of America, JP Morgan, and Wells Fargo (NYSE: WFC), to arrange debt funding for this significant purchase of the retail pharmacy giant.

Potential Transition to Private Ownership

If the deal goes through, Walgreens Boots Alliance would transition from a public entity to a private one. This could facilitate the future sale of Boots, the UK-based chain operating about 1,900 stores with over 50,000 employees. Speculation surrounds Stefano Pessina, known for orchestrating significant transactions at Boots, potentially becoming the majority owner.

Divestiture of VillageMD

Sycamore Partners is also anticipated to divest VillageMD, a doctor-staffed clinic network, which Walgreens has considered as a separate entity. The Wall Street Journal recently reported ongoing discussions between Sycamore Partners and WBA, contributing to a rebound in WBA’s market value, which had previously dipped below $8 billion.

Stake of Stefano Pessina

Stefano Pessina, an approximate 17% stakeholder in WBA, may solidify his ownership of Boots depending on the structure of the Sycamore deal. This news follows Walgreens halting earlier attempts to sell Boots, as they found the proposals insufficient in meeting their valuation expectations.

Leadership Changes at Boots

The potential change in ownership comes as Boots welcomes a new leader after the departure of long-standing managing director Seb (EPA: SEBF) James, who has left for another healthcare opportunity. Boots has a rich history, dating back to its founding by John Boot in 1849 as a herbal remedies shop in Nottingham.