Walgreens Boots Alliance Inc., led by Chief Executive Officer Stefano Pessina, has been reviewing a potential deal to take the company private in what could become the largest leveraged buyout in history, people familiar with the matter said.
The company has recently held informal talks with private equity firms including KKR & Co., the people said, asking not to be identified because the information is private. Pessina is Walgreens Bootss largest shareholder with a stake of about 16%, according to data compiled by Bloomberg.
Deerfield, Illinois-based Walgreens Boots has a market value of about $55 billion and $16.8 billion of debt. At that size, a take-private of the company would top the largest leveraged buyout in history: the 2007 sale of utility TXU Corp. to KKR & Co. and TPG, which was worth about $45 billion including debt, according to data compiled by Bloomberg.
Some of the buyout firms have so far shown reluctance to participate in a deal, the people said. Its unclear how feasible the transaction would be, and the company could decide against pursuing the idea, the people said.
Representatives for Walgreens Boots and KKR declined to comment.
Walgreens Boots rose 3.1% to $61.52 at 3:38 p.m. in New York trading. Its bonds dropped the most ever.
A buyout would give Walgreens Boots time to adapt to a fast-changing retail landscape, free from the quarter-by-quarter demands of public shareholders.
The company is under immense pressure from online competitors including Amazon.com Inc., which have chipped away at front-of-the-store sales of household and beauty items. While top rival CVS Health Corp. has grown into a vertically integrated health-care giant, Walgreens Boots has doubled down on retail, announcing pilot partnerships with retailers including grocer Kroger Co.
It has also announced an ambitious $1.8 billion in annual cost cuts and plans to shutter its in-store health clinics.
This wouldnt be Pessinas first ambitious private equity deal.
The native of Italy previously ran Alliance Boots, which he had acquired with KKR in 2007. The transaction came at the height of the buyout boom and underscored the challenges of financing jumbo take-privates, as banks struggled at the time to find buyers for the loans to Read More – Source