The parent company of UK pharmacist and retailer Boots, Walgreens Boots Alliance, have seen their share price peak late this week after rumours began to circulate that a private equity firm, KKR, has made a deal to buy out the company completely.
The deal, which if it is successful will be the biggest buyout of a major company ever, would take the company off of the stock market and turn it private for the first time in decades.
KKR used to own shares in the international company – which trades under the name Walgreens in the United States – which they sold in 2016. Now, however, it seems as though the equity firm is eager to buy out the company completely.
Walgreens Boots Alliance currently operates in 25 different countries and is globally worth over $50bn. But its debts are forever expanding with a reported $17bn yet to be repaid.
The company has already begun to take cost-cutting measures by closing stores across the UK and laying off a round of employees both at its centralised offices and its various locations.
Earlier in 2019, Boots announced they would shut 200 of their stores across the UK. Whilst the company was not actively looking for investment proposals from larger companies, it appears that KKR sees a plum investment opportunity in the company, whose UK stores are one of the most familiar faces on the struggling British high street.
However, experts have already suggested that such a deal may run into trouble before it even gets going.
Whilst KKR has reportedly made their first bid to Walgreens, it’s likely they’ll have to compete with other investors if the company opens up the floor to other deals. Moreover, removing the firm from the stock market and operating completely privately is unlikely to be popular with shareholders.
There were reports made earlier in the week that the WBA were actively exploring private investment deals, but no firm had engaged with the struggling business until now.
When the news about the potential deal broke, Boots’ share price experienced an upturn of around 6% after prices had steadily fallen over the last three quarters of 2019 by an average of 20%, thanks to its fledgling profits.