Bloomberg Businessweek - USA (2019-11-25)

24

○ Walgreens and private equity

giant KKR talk about a deal,

but the price may be too high

KKR formally approached Walgreens in

November about taking the company private in

what could be the biggest leveraged buyout in his-

tory. Pessina, Walgreens’ largest shareholder with a

16.25% stake valued at about $9 billion, is expected

to be the crucial player in any deal.

It’s not difficult to see why such a transaction

might make sense for Pessina and Walgreens inves-

tors. The 118-year-old retailer is fighting to stay rel-

evant at a time when Amazon.com Inc. and other

online retailers are stealing customers for the house-

hold and beauty items in the front of its more than

9,000 U.S. stores—and pharmacy startups are com-

ing for the prescription drug business at the back. Its

plan to acquire rival Rite Aid Corp. was thwarted by

regulatory concerns in 2017, and the company was

Stefano Pessina, chief executive officer of Walgreens

Boots Alliance Inc., has long had an affinity for

private equity. In 2007 he teamed up with the buy-

out giant KKR & Co. to take Britain’s biggest phar-

macy chain, Alliance Boots Plc, private. That move,

followed by further deals to fold it into U.S.-based

Walgreens, was the genesis of the multinational

drugstore company as it’s known today. Now, KKR

and Pessina might be teaming up again—though

many doubt a deal is possible this time around.

Edited by

Pat Regnier

Bloomberg Businessweek November 25, 2019