Walgreens Boots Alliance has decided to step away from the public market in a significant acquisition by Sycamore Partners, a private equity firm known for its expertise in revitalizing retail businesses. This $10 billion deal has sparked widespread discussion about the future of Walgreens, particularly its vast real estate portfolio.

Walgreens and Sycamore Partners Strike a Deal

In a move that surprised many industry observers, Walgreens Boots Alliance announced March 6, 2025, that it had entered into a definitive agreement to be acquired by Sycamore Partners. This transaction, with an equity value of $10 billion, could reach a total value of up to $23.7 billion, including debt and potential future payouts. Sycamore Partners will acquire Walgreens’ shares at a price of $11.45 per share in cash. Furthermore, the agreement includes a “Divested Asset Proceed Right” (DAP Right), which allows shareholders to receive up to an additional $3.00 per share in cash from the future monetization of VillageMD businesses.

This acquisition comes at a time when Walgreens is navigating a challenging landscape in the pharmacy retail sector. Walgreens Boots Alliance CEO Tim Wentworth acknowledged these challenges, stating, “we are focused on making healthcare delivery more effective, convenient, and affordable as we navigate the challenges of a rapidly evolving pharmacy industry and an increasingly complex and competitive retail landscape.” He further explained that while the company is making progress in its turnaround strategy, “meaningful value creation will take time, focus and change that is better managed as a private company.” The deal is subjected to regulatory and shareholder approval and is expected to close in the fourth quarter of 2025.

Walgreens Financial Performance

To understand the context of this acquisition, it’s important to examine Walgreens Boots Alliance’s recent financial performance. Over the past decade, the company has faced increasing competition, evolving reimbursement models, and a growing debt burden, which have impacted its profitability and share price. In 2023 and 2024, the company recorded negative net income at $3,080M and $8,636M, respectively in debt. Total asset value also decreased in 2024 from $96,628M in 2023 to $81,037M. Number of stores decreased from 13,532 to 12,712.

In addition to its core retail pharmacy business, Walgreens Boots Alliance has a diverse portfolio of healthcare-focused investments. These investments include:

• Cencora: A leading global pharmaceutical sourcing and distribution services company.
• Boots Hearingcare: A supplier of digital hearing aids and accessories in the UK.
• BrightSpring Health Services: A provider of home and community-based health services.
• VillageMD: A leading U.S. provider of value-based primary care services.
• Investments in China: GuoDa, a leading retail pharmacy chain, and Nanjing Pharmaceutical Company Limited, a major pharmaceutical wholesaler.

Sycamore Partners: A History of Retail Turnarounds

Sycamore Partners, founded in 2011, has established itself as a prominent player in the private equity landscape, specializing in retail and consumer investments. The firm manages approximately $10 billion in aggregate committed capital from a diverse investor base, including leading endowments, financial institutions, family offices, pension plans, and sovereign wealth funds.

Sycamore Partners has a reputation for acquiring distressed retailers and implementing strategies to enhance their operational efficiency and profitability. The firm’s investment approach involves partnering with management teams to improve the operating profitability and strategic value of their businesses. They provide flexible capital structured for each investment to position companies for success.

A few examples include Staples (2017), Belk (2015), Hot Topic (2013), The Limited (2017), Premium Apparel (2020), Margaritaville at Sea (2023), Playa Bowls (2024), and more.

Walgreens’ Real Estate Holdings

Walgreens Boots Alliance stands as a dominant force in the pharmacy retail industry, boasting the largest network of stores in the U.S. and Europe. With a global presence spanning 11 countries, the company operates over 13,200 stores. In the United States alone, Walgreens has a footprint of 8,175 stores, encompassing both Walgreens and Duane Reade locations. It’s important to note that Walgreens stores are corporate-owned, not franchises. While the company owns approximately 15% of its pharmacy locations, the majority are leased.

Walgreens has a strategic approach to real estate, with a preference for freestanding locations situated at signalized intersections with high traffic counts. These stores typically occupy spacious lots, providing ample parking and drive-thru facilities to enhance customer convenience. In addition to freestanding stores, Walgreens also maintains a presence in strip centers, central business districts, and outlots of shopping centers. Walgreens’ lease agreements typically have terms ranging from 20 to 25 years.

Historical Precedents

Examining past acquisitions in the retail pharmacy sector can offer valuable insights into the potential trajectory of Walgreens’ real estate under Sycamore Partners’ ownership. One notable example is the acquisition of Rite Aid by private equity firm KKR in 2018. Following the acquisition, KKR implemented a strategy focused on cost reduction and store closures, ultimately leading to smaller real estate footprint for Rite Aid.

However, it’s crucial to recognize that each acquisition has its own unique circumstances and objectives. The strategies employed by Sycamore Partners with Walgreens may differ significantly from those used in previous transactions. The ultimate impact on Walgreens’ real estate will be shaped by a multitude of factors, including the company’s financial performance, prevailing market conditions, and Sycamore Partners’ long-term vision for the business.

It’s also important to consider the broader context of the retail industry when analyzing historical precedents. The retail landscape has undergone a dynamic transformation in recent years, with the rise of e-commerce and changing consumer preferences. These trends have forced many traditional retailers to re-evaluate their real estate strategies and adapt to the evolving market dynamics.

Potential Impact on Real Estate

The acquisition of Walgreens by Sycamore Partners had generated considerable interest and speculation among industry analysts and experts. Several potential scenarios have emerged regarding the future of Walgreens’ real estate portfolio.

Some analysts suggest that Sycamore Partners may pursue a strategy of breaking up Walgreens Boost Alliance to unlock value. This could involve selling off or spinning off various divisions, such as the international Boots chain, VillageMD, or Duane Reade. Such a move could lead to significant changes in Walgreens’ real estate strategy, potentially involving the sale leasebacks.

Other experts believe that Sycamore Partners may focus on optimizing Walgreens’ existing real estate portfolio. This could involve closing underperforming stores, renegotiating leases, or repurposing properties to align with the company’s evolving business model. Walgreens has already announced plans to close roughly 1,200 stores over the next three years, including 500 in fiscal 2025.

Taking Walgreens private provides the company with greater flexibility to implement changes and improve its business without the immediate pressure of public market scrutiny. This could allow Sycamore Partners to make bold moves to revitalize the company and position it for long-term success.

The “Go-Shop” Period

An interesting aspect of the acquisition agreement is the inclusion of a “go-shop” period. This provision allows Walgreens, with the assistance of its financial advisor Centerview Partners, to actively solicit alternative acquisition proposals from other potential buyers. The go-shop period lasts for 35 days. During this time Walgreens can evaluate and potentially enter into negotiations with other interested parties. However, there is no guarantee that this process with result in a superior proposal.

What’s Next?

The acquisition of Walgreens Boots Alliance by Sycamore Partners marks a pivotal moment in the company’s history. It has been publicly traded since 1927 and has a 120-year history in the U.S. retail market. This transaction has the potential to reshape the landscape of pharmacy retail and its associated real estate holdings. While the exact strategies that Sycamore Partners will employ remain to be seem, Walgreens’ real estate portfolio will undergo a period of transformation. For landlords, operational shifts may be on the horizon as Sycamore Partners focuses on maximizing efficiencies. This may include portfolio optimization, restructuring, or lease renegotiations.