Walgreens Could Go Private This Week After A $10 Billion Deal With Sycamore Partners: Report

Walgreens Boots Alliance Inc. WBA rose over 7% in premarket on Tuesday as it is on the verge of finalizing an agreement with private-equity firm Sycamore Partners to take the drugstore chain private.

What Happened: The deal is approximately valued at $10 billion, according to a report by the Wall Street Journal. The two parties are reportedly aiming to complete the transaction as early as Thursday, contingent on avoiding any last-minute complications.

Discussions have centered on Sycamore Partners paying between $11.30 and $11.40 per share in cash. The potential deal may also include contingent value rights, which would provide additional value to shareholders if certain performance targets are met in the future, the report stated.

If Sycamore Partners successfully acquires the entire company, the firm intends to retain Walgreens’ core U.S. retail operations. The remaining segments of the company would likely be sold off or taken public.

Why It Matters: According to a mid-December report by the Wall Street Journal, Sycamore Partners was in discussions to acquire Walgreens and take the pharmacy chain private, following nearly a decade of declining stock value.

Price Action: Walgreens fell 3.93% on Monday, underperforming the 2.76% fall in the Fidelity NASDAQ Composite Index ETF ONEQ, which tracks the Nasdaq Composite index. It was up 7.12% in premarket on Tuesday.

The stock remains 11.64% higher on a year-to-date basis, however, it’s down 50.15% over a year.

Benzinga tracks 21 analysts with an average price target of $20.82 for the stock, reflecting a “sell” rating. Estimates range widely from $7 to $54. Recent ratings from Deutsche Bank, and Truist Securities average at $11.33, suggesting a potential 5.04% upside.