Walgreens stock climbs on Sycamore Partners deal report

Shares of Walgreens jumped about 20% on Tuesday on a report that the corporate is in talks to sell itself to personal equity firm Sycamore Partners. 

Walgreens and Sycamore have been discussing a deal that could possibly be accomplished early next yr, The Wall Street Journal reported, citing people aware of the matter. Latest York-based Sycamore would likely dump pieces of Walgreens’ business or work with partners, the Journal reported.

A Walgreens spokesperson declined to comment on the reported talks.

The report comes during a rough period for the retail pharmacy giant. The corporate’s stock was down greater than 60% for the yr before its climb Tuesday.

Walgreens — squeezed by the transition out of the Covid pandemic, a leadership shakeup, pharmacy reimbursement headwinds and its wobbly push into health care — has underperformed Wall Street’s earnings expectations for 2 straight quarters. Walgreens’ pharmacy business specifically has been flailing attributable to falling reimbursement rates for prescribed drugs and several other aspects pressuring the front of the shop, akin to inflation and increased competition.

The corporate is attempting to regain its footing with a latest CEO, health-care industry veteran Tim Wentworth. Since moving into the role in October 2023, Wentworth has moved to slash costs at Walgreens.

In October, Walgreens said it plans to shut roughly 1,200 of its drugstores over the following three years, including 500 in fiscal 2025 alone. Walgreens has around 8,700 locations within the U.S., 1 / 4 of which it says are unprofitable. The corporate has also scaled back its push into primary care by cutting its stake in primary care provider VillageMD. 

Walgreens has reportedly been seen as a possible private equity goal prior to now. 

In 2019, private equity firm KKR made a roughly $70 billion buyout offer to the corporate, the Financial Times and Bloomberg reported on the time.