Walgreens Faces Major Acquisition Impacting Gehe/AHD

The troubled US pharmacy chain Walgreens Boots Alliance (WBA) is reportedly on the verge of a significant acquisition by the private equity firm Sycamore Partners. Multiple media outlets have reported on this development, and Walgreens has issued a press release confirming the news.

According to reports, Sycamore is prepared to pay $11.45 per share for the company, which equates to an equity value of approximately $10 billion. Additionally, $3 per share could be added contingent upon the sale of various business segments, with Walgreens estimating the total transaction value, including debts and future payouts, to be as high as $23.7 billion.

This acquisition will also affect Gehe/AHD, a pharmaceutical wholesaler based in Frankfurt, Germany. Gehe and Alliance Healthcare Deutschland (AHD) merged in 2020, and AHD has indicated that the acquisition encompasses the entire international segment of Walgreens Boots Alliance, including its pharmaceutical wholesale operations in Germany. However, specific details regarding the impact on Gehe/AHD remain undisclosed at this time.

Walgreens Boots Alliance has been under financial strain for several years, facing challenges from evolving consumer behaviors, particularly since the COVID-19 pandemic, alongside rising costs and intensified competition. The company's market capitalization, which surpassed $100 billion in 2015, has dwindled to around $7.5 billion at its lowest point. Over the past year, Walgreens shares have lost approximately 65% of their value.

In response to these pressures, the company announced significant restructuring measures last summer, including a review of the potential closure of a quarter of its 8,600 Walgreens stores in the US over the next three years. In October 2024, Walgreens announced the closure of 1,200 stores and, in January 2025, it suspended its quarterly dividend to improve its financial situation, which further unsettled investors.

Market analysts suggest that Sycamore intends to retain Walgreens' core operations, which focus on the US retail business. Historically, Sycamore has generated value through cost-cutting strategies, store closures, and asset sales, prompting expectations of a similar approach for Walgreens.

This could lead to the potential sale of non-core assets, such as Boots, the British pharmacy chain, which Walgreens had previously contemplated selling but ultimately decided against doing so two years ago.

Post-acquisition, Walgreens Boots Alliance is expected to delist from the stock market as it transitions into a private entity, allowing for a renewed focus on its strategic direction. Media reports indicate that the company will leverage Sycamore's expertise in its restructuring efforts. Stefano Pessina, the largest individual shareholder and former CEO of WBA, who currently holds 17% of the company's stock, intends to reinvest the proceeds from the sale back into the private Walgreens enterprise.