Sycamore Partners' $23.7bn Acquisition of Walgreens Boots Alliance
- katerinageorgiou5
- Jun 13
- 5 min read
By Parth Talwar, Mateo Sy, Grace Pui, Karson Shi (HKU)
Photo: Arpad Czapp (Unsplash)
Overview of the deal
Acquirer: Sycamore Partners
Target: Walgreens Boots Alliance (WBA)
Total Transaction Size: $23.7 billion
Closed Date: H1 2025
Target Advisors: Centerview Partners, Morgan Stanley (Financial); Kirkland & Ellis, Ropes & Gray (Legal)
Acquirer Advisors: UBS, Goldman Sachs, J.P. Morgan, Citi, Wells Fargo (Financial); Davis Polk & Wardwell, Bass Berry & Sims (Legal)
In a transaction worth $23.7 billion, Sycamore Partners, a U.S.-based private equity firm, has fully acquired Walgreens Boots Alliance (WBA), a leading retail company with over 12,500 locations worldwide. This acquisition signifies a big gamble for Sycamore as it looks to take WBA private, a firm that has been listed for nearly a decade. The deal is centered around Sycamore’s beliefs in leading a financial turnaround.
For WBA, the deal is a step towards financial recovery, with their market value falling to less than $10 billion from its $100 billion peak in 2014. Notably, the devaluation was driven by an increase in e-commerce competition and a costly expansion into healthcare. Hence, through going private, WBA and Sycamore hope to have more flexibility in potential changes.
For Sycamore, control over WBA’s well-developed real estate and brand portfolio, as well as a potential financial recovery, would offer immense value.
Company Details (Acquirer - Sycamore Partners)
Sycamore Partners is a U.S.-based private equity firm. It specializes in investments in the consumer, distribution, and retail-related sectors, focusing on acquiring companies undergoing transitions or facing operational challenges. The firm aims to create value through restructuring, operational improvements, or strategic divestitures, with notable deals including acquisitions of Staples’ North American retail business, Torrid, and Hot Topic. Sycamore is recognized for its flexible capital strategies and expertise in sector consolidation.
Founded in 2011, headquartered in New York City, New York, U.S.
CEO: Stefan L. Kaluzny
Number of employees: ~94 (as of March 2025)
Market Cap: N/A (privately held)
AUM: ~$13 billion
Recent Transactions: $9.4 billion acquisition of Fort Myers (Sep, 2023), $400 million acquisition of Lowe's Canadian retail business (Nov, 2022)
Company Details (Target- Walgreens Boots Alliance)
Walgreens Boots Alliance (WBA) is one of the world's largest retail pharmacy, health, and wellness companies. Formed in 2014 via the merger of Walgreens (U.S.) and Alliance Boots (Europe), it operates a vast network of drugstores and pharmacies under brands like Walgreens and Boots, along with a global pharmaceutical wholesale business.
Founded on December 31, 2024, headquartered in Deerfield, Illinois, U.S.
CEO: Tim Wentworth
Number of employees: 312,000 (as of 2024)
Market cap: $9.82 billion (as of 13/06/2025)
EV: $38.83 billion
LTM Revenue: $151.95 billion
LTM EBITDA: $1.42 billion
LTM EV/Revenue: 0.26x
LTM EV/EBITDA: 27.35x
“While we are making progress against our ambitious turnaround strategy, meaningful value creation will take time, focus, and change that is better managed as a private company." - Tim Wentworth, CEO of Walgreens Boots Alliance
Projections and Assumptions
Short-Term Consequences
The $23.7 billion proposed acquisition of Walgreens Boots Alliance (WBA) by Sycamore Partners is expected to have notable short-term consequences across financial, operational, and labor fronts. Financially, the transaction could initially be neutral or even dilutive to EPS, given the high leverage involved and uncertain cost synergies. On the other hand, there is a potential for earnings accretion through restructuring. Operationally, the proposed three-way split, separating the U.S. retail pharmacy, Boots UK, and the healthcare business, signals a strategic streamlining that may narrow WBA’s product offerings in the short run while realigning focus across distinct business verticals. Geographically, this split also suggests a pivot away from a unified global strategy, with Boots UK potentially being divested or spun off, impacting WBA's European footprint.
In terms of leadership and workforce, while formal management changes have not yet been confirmed, Sycamore’s track record of aggressive cost-cutting has stirred anxiety among employees, particularly in the UK, where fears of store closures and layoffs have intensified. The public and internal response has been cautious, especially from union groups and policymakers concerned about job security. Meanwhile, the market reaction has been mixed; shares of WBA saw a slight uptick following the announcement, driven by takeover optimism, but have since levelled off as investor focus shifts to execution risks and the long-term viability of Sycamore’s plans.
Long-Term Upsides
Sycamore Partners' acquisition of Walgreens Boots Alliance (WBA) presents several long-term advantages, primarily by facilitating a targeted turnaround and strategic repositioning that alleviates the pressures associated with public market scrutiny. As a privately held entity under Sycamore’s stewardship, Walgreens is positioned to implement necessary changes that may initially disrupt operations without the immediate oversight of Wall Street, thus allowing management to engage in a more thorough and patient-centered long-term strategic planning process.
Sycamore Partners possesses a robust history of executing successful retail turnarounds, which it can leverage to optimize Walgreens’ substantial retail infrastructure and consumer services. This collaboration is anticipated to fortify Walgreens’ standing as a premier option in pharmacy, retail, and healthcare services by merging Sycamore’s retail expertise with Walgreens’ healthcare competencies. Additionally, the acquisition affords Walgreens the financial latitude to expedite efforts related to cost reduction and the closure of underperforming locations, a critical move considering the company's previous overexpansion and elevated debt levels.
Furthermore, integral to the acquisition is the strategy to monetize Walgreens’ holdings in VillageMD, a primary care organization. This initiative not only has the potential to unlock enhanced shareholder value but also enables Walgreens to concentrate on its core pharmacy operations. The proceeds from this monetization can serve to fund reinvestment or facilitate debt alleviation, thereby further bolstering the organization’s financial stability.
In conclusion, the long-term benefits stemming from Sycamore’s acquisition encompass increased strategic agility as a private corporation, operational enhancements driven by proven retail turnaround strategies, financial restructuring facilitated by asset monetization, and a reinforced emphasis on Walgreens’ core pharmacy and retail capabilities. Collectively, these factors position the company for sustainable growth within the competitive healthcare and retail environments.
Risks and Uncertainties
The $23.7 billion acquisition of Walgreens Boots Alliance (WBA) by Sycamore Partners presents considerable challenges and uncertainties that may hinder its long-term viability. A primary concern is the deal’s heavy reliance on leverage, with approximately 83% of the purchase price funded through debt. This financial structure places substantial pressure on WBA to swiftly achieve operational efficiencies and cost synergies, particularly amid declining profitability and persistent challenges in its core pharmacy operations.
Another critical factor is the complexity of execution. Sycamore’s plan to restructure WBA through a tripartite division - separating its U.S. retail pharmacy, Boots UK, and healthcare divisions introduces operational intricacies that demand meticulous coordination. Disruptions in service delivery, leadership misalignment, or delays in divestitures could impede the turnaround process and diminish expected returns.
Additionally, the deal still needs approval from regulators in several countries, including the U.S., U.K., and major EU markets. While there are no major antitrust issues, delays in getting these approvals could slow down integration and delay the expected benefits. At the same time, the company faces other challenges, like a tough retail market, lower healthcare reimbursements, and rising labor costs, especially in the U.S. and U.K. These factors could put pressure on cash flow, especially since the company is taking on a lot of debt. For the deal to succeed, Sycamore will need to execute its plans carefully, maintain a clear strategy, and hope for stable economic conditions.