No investor likes it when a potential buyout deal for one of their holdings hits a serious roadblock. This is apparently happening to Walgreens Boots Alliance (WBA -4.46%), according to a media report. So, the market aggressively traded out of the pharmacy chain operator’s stock on Monday. It fell by nearly 5% in price, a notably steeper decline than the 1.5% dip of the S&P 500 index on the day.
A breakdown in talks?
CNBC’s David Faber reported live and on-air that unnamed sources told him that a looming arrangement between Walgreens and private equity firm Sycamore Partners for the latter to buy the former is “mostly dead.”
That comes after a widely disseminated report in The Wall Street Journal in mid-December last year stating that the two sides were in discussions to take Walgreens private. The financial newspaper, citing “people familiar with the matter,” whom it did not identify, said at the time that a deal could be agreed upon as soon as early 2025.
Many finance professionals — and not a few investors — consider Walgreens a juicy target for private equity players. In fact, according to reporting from Bloomberg and The Financial Times in 2019, big private equity firm KKR made a $70 billion offer that year. However, KKR denied putting in a binding bid.
Perhaps not a desired asset
Neither Walgreens nor Sycamore has yet commented on Faber’s report, and given that it’s likely a sensitive matter if accurate, neither likely will. Walgreens is a prominent, high-profile company in its industry and operates a brand familiar to many Americans. However, it has struggled financially and faces a potentially tough future. As such, it’s likely best avoided by investors.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
