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The on-again, off-again speculation that Walgreens is for sale to a private equity firm is on again.
CNBC’s David Faber revived talk – and Walgreen’s stock – on Tuesday when he said on air that the pharmacy chain may be sold to New York-based private equity firm Sycamore Partners, according to Bloomberg. Faber said he was upgrading the deal to “alive” based on what he’s heard from his contacts.
Sycamore specializes in retail and consumer investments.
Stocks for Walgreens, which has been beleaguered by financial losses, temporarily rose 14% yesterday on the news, according to Seeking Alpha. Shares were down 1.18% this morning.
Walgreens has reportedly said that executives don’t comment on rumors or speculation.
WHY THIS MATTERS
Sycamore may try to do a deal with Walgreens where health units such as VillageMD are sold, according to Seeking Alpha. A private investor could also try to refinance Walgreens’ debt so it’s connected to certain units and not the entire company, the report said.
THE LARGER TREND
Last month a deal was considered dead.
Walgreens CEO Tim Wentworth didn’t address the issue during the company’s Q1 earnings call on Jan.10.
The Wall Street Journal first reported in December that Sycamore was in talks to take Walgreens private.
Walgreens lost $265 million in its first fiscal quarter, which ended Nov. 30 – a sharp decline compared to the $67 million net loss posted in its first quarter a year ago.
Adjusted operating income was also lower this year at $539 million, compared to $687 million a year ago. The operating loss reflects higher costs related to the Footprint Optimization Program in the U.S. Retail Pharmacy segment, and both operating loss and adjusted operating income reflect lower U.S. retail sales and lapping prior year sale-leaseback gains, partly offset by cost savings initiatives and growth in the U.S. Healthcare segment.
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