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Bloomberg reports that Walgreens Boots Alliance "has been reviewing a potential deal to take the company private in what could become the largest leveraged buyout in history … The company has recently held informal talks with private equity firms including KKR & Co."

The advantages, according to : "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."

The story notes that a private equity deal likely is being championed by CEO Stefano Pessina, who also is Walgreens Boots’s largest shareholder with a stake of about 16 percent. It would not be his first such deal: He "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 pay for that deal."

Bloomberg writes that "Walgreens Boots is the largest retail pharmacy in the U.S. and Europe, with more than 18,750 stores in 11 countries," and "a market value of about $55 billion and $16.8 billion of debt."
KC's View:
Aside from its relationship with Kroger - an initiative that I really like - there is very little about Walgreens is doing that I find to be progressive and ambitious, especially when compared with CVS. When I read about this possibility, I have to wonder if it will add so much debt to its balance sheet that it will have to cut rather than invest, which will make it harder to compete in an environment where healthcare and selfcare are undergoing radical changes.