Sycamore Partners is in talks to acquire Walgreens

(Bloomberg) — Sycamore Partners is in talks to acquire struggling drugstore chain Walgreens Boots Alliance Inc (WBA), according to people familiar with the matter.

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The New York-based private equity firm is in ongoing discussions about a deal to take Walgreens private, said the people, who spoke on condition of anonymity because the details are not public. It is possible that the talks could collapse without an agreement being reached, the people added.

The stock rose as much as 28% on the news, which was first reported by The Wall Street Journal. That was the biggest one-day gain since at least 1980. Walgreens shares had lost two-thirds of their value for the year through Monday. This is the worst performance of any stock in the S&P 500.

The stock was up 20% as of 1:48 p.m. in New York on Tuesday, giving the company a market value of about $9.2 billion.

Representatives for Walgreens and Sycamore Partners declined to comment.

In October, the pharmacy chain said it would close about 1,200 stores over the next three years after posting a $3 billion loss in the fourth quarter due to charges related to opioid liabilities and the write-down of an investment in China. The company’s retail division has struggled with the rise of online retailers such as Amazon.com and discount giants Dollar General and Costco.

Walgreens has been a take-private contender for years. KKR & Co., working with current chairman and largest shareholder Stefano Pessina, formally approached the drugstore giant about a deal in 2019, when the company had a market value of $56 billion. Sycamore Partners has a long history of acquiring retailers that have seen better days, including office equipment maker Staples Inc. and department store chain Belk Inc.

– With assistance from Gillian Tan and Cynthia Koons.

(Updates trading in fourth paragraph. An earlier version of this report corrected the spelling of KKR & Co. in the last paragraph.)

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