Sycamore Partners is nearing an acquisition of Walgreens Boots Alliance, people with knowledge of the matter said, in a deal that could end the beauty and health retailer’s tumultuous run as a public company.

The private equity firm and US-based Walgreens are said to be putting the final touches on a transaction that may be announced as soon as this week. The Wall Street Journal reported earlier that Sycamore was closing in on a deal to acquire Walgreens for $11.30 to $11.40 per share in cash, or around $10 billion.

Following the news, Walgreens’ shares surged as much as 8.2%, closing at $10.84, which is understandable given the potential offer price.

If the deal proceeds, Walgreens would be removed from the stock market, marking the end of its public trading period, which has been characterised by declining revenues, legal challenges related to opioid prescriptions, and increasing competition in the healthcare sector.

Potential restructuring of Walgreens

A takeover by Sycamore could lead to a significant restructuring of WBA, potentially involving the break-up of the company’s various divisions. Its portfolio includes UK beauty and health chain Boots, US healthcare provider VillageMD, drugstore chain Duane Reade, and speciality pharmacy group Shields Health Solutions.

Boots in particular is interesting at the moment and despite some tough times in recent years, appears to be on a solid recovery trajectory that’s making the most of its strength in both mass-market and prestige beauty.

Analysts have long suggested that Walgreens’ complex business model would require restructuring to optimise its operations. Reports indicate that Stefano Pessina, Walgreens’ chairman and a key figure behind its 2014 merger with Alliance Boots, is expected to roll over his stake as part of the transaction.

While discussions are at an advanced stage, sources caution that delays or last-minute hurdles could still emerge before the official announcement.

Financing and previous takeover attempts

The transaction would require significant financing from banks, and reports suggest that several of the largest financial institutions in the US are preparing proposals to support the acquisition.

This isn’t the first time Walgreens has considered going private. In 2019, KKR & Co. explored a leveraged buyout of the company, but the deal ultimately collapsed. For Sycamore, this acquisition represents another high-profile retail deal, underscoring private equity’s continued interest in large-scale transactions within the healthcare and consumer sectors.

There have been a number of other attempts to sell the business but these have reportedly faltered on the inability to find a buyer who would pay the price WBA wanted.