Walgreens shares rise on Sycamore Partners deal report

Shares of Walgreens The stock rose nearly 25% on Tuesday after it was reported that the company was in talks to sell to private equity firm Sycamore Partners.

Walgreens and Sycamore have discussed a deal that could close early next year, the Wall Street Journal reported, citing people familiar with the matter.

A Walgreens spokesman declined to comment on the reported conversations.

The report comes at a difficult time for the pharmacy giant. The company’s shares fell more than 60% for the year before rising on Tuesday.

Walgreens — under pressure from overcoming the Covid pandemic, a leadership change, pressure on pharmacy reimbursements and its shaky foray into health care — fell short of Wall Street’s earnings expectations for two straight quarters.

In October, Walgreens announced that it plans to close around 1,200 of its drugstores over the next three years, including 500 in fiscal year 2025 alone. Walgreens has around 8,700 locations in the US, a quarter of which are unprofitable. The company also scaled back its push into primary care by reducing its stake in primary care provider VillageMD.

Walgreens has reportedly been considered a potential private equity target in the past.

In 2019, private equity firm KKR made a roughly $70 billion takeover offer for the company, the Financial Times and Bloomberg reported at the time.

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