Walgreens Boots Alliance shares experienced an upward trend early Friday as the prominent drugstore chain announced a definitive agreement to be acquired and taken private by an affiliate of Sycamore Partners in a monumental deal valued at up to $23.7 billion. Under the newly established terms of the agreement, shareholders of Walgreens will be compensated with $11.45 per share in cash at the closure of the transaction, as detailed in a statement released late Thursday.
In addition to this cash offer, stockholders stand to gain an additional $3 per share in cash, contingent upon the future monetization of the company's debt and equity interests in its primary care network, VillageMD, which encompasses the Village Medical, Summit Health, and CityMD businesses. This total transaction value signifies a remarkable premium of up to 63% when compared to Walgreens' closing share price on December 9, the day prior to growing media speculation surrounding a potential acquisition, as noted by the company.
In the latest premarket activity, Walgreens shares surged by 5.6%. The acquisition deal is subject to approval from Walgreens' investors and must pass regulatory scrutiny, with an anticipated completion slated for the fourth quarter of the fiscal year. Stefano Pessina, the Chairman of Walgreens and major stakeholder through his holding company, which controls approximately 17% of Walgreens' shares, has committed to vote favorably towards this transaction.
Upon completion, the company will transition into a private entity and will cease public trading. Importantly, the deal incorporates an initial 'go-shop' period set to last for 35 days, allowing Walgreens to actively solicit and assess alternative acquisition proposals. In a statement regarding the acquisition, Walgreens' Chief Executive Tim Wentworth acknowledged the ongoing progress in implementing their ambitious turnaround strategy, emphasizing that sustainable value creation necessitates time, focus, and a shift that is more effectively managed within a private framework.
He articulated confidence that this agreement offers shareholders a premium cash value while allowing for the potential to harness further value from the monetization of VillageMD businesses in the future. Following the completion of the deal with Sycamore, Walgreens will retain its headquarters in the Chicago area, continuing its operations under the Walgreens, Boots, and its diverse portfolio of consumer brands.
Sycamore Managing Director Stefan Kaluzny expressed optimism surrounding the transaction, stating, 'This transaction reflects our confidence in Walgreens' pharmacy-led model and essential role in driving better outcomes for patients, customers, and communities.' Post-transaction, a dedicated committee is expected to oversee the process of divesting VillageMD businesses, with Walgreens anticipating to secure all initial proceeds from any potential sale, reaching up to $3.4 billion, which corresponds with the amount of debt owed to the company by VillageMD as of February 28.
Looking ahead, Walgreens is scheduled to unveil its fiscal second-quarter results in April..