Walgreens Boots Alliance, the US-listed global pharmacy group, is exploring the potential of a $70 billion (Dh257bn) deal to take the company private. It is in talks with private equity groups for what would be the largest ever leveraged buyout.
No final decision has been made on whether to pursue the buyout idea and it is unclear whether such large-scale financing would be available, the Financial Times reported.
The UK newspaper said the take-private deal is a long-shot that would face several challenges, including the size of the transaction.
Walgreens group has more than 18,750 stores in 11 countries and annual revenues of nearly $34bn. The Illinois company, which operates Walgreens and Duane Reade pharmacies in the US and Boots in Britain has been closing stores and launching cross-selling partnerships with other companies as it tries to cut costs and boost its growth.
Discussions of the deal come as Walgreens share price dropped nearly 40 per cent since last December.
Italian billionaire Stefano Pessina, who owns 16 per cent of Walgreens shares and is the biggest shareholder, has been involved in aggressive dealmaking over the years and expressed his preference to turn companies around away from the attention of public markets.
Walgreens has hired investment bank Evercore Partners to explore whether a transaction can be put together, Reuters reported, saying a deal is far from certain.
The company is said to have held informal talks with private equity companies including KKR & Co.
Many private equity companies have pushed back against the idea of the deal on concerns regarding Walgreens’ business prospects and challenges of financing the deal, Reuters reported.
A leveraged buyout of Walgreens would likely require participation of several private equity entities, it said, with each writing large checks at a time when many have lost their appetite for teaming together on so-called club deals.