Sycamore Partners may acquire Walgreens, a pharmacy chain, according to a report.

• The stock price of Walgreens increased by approximately 20% following news that the company is in discussions to be acquired by private equity firm Sycamore Partners.
• According to The Wall Street Journal, sources close to the matter reveal that Walgreens and Sycamore have been in talks about a potential deal that could be finalized by early next year.
• The report comes during a rough period for the retail pharmacy giant.

On Tuesday, shares of the company experienced a 20% increase in value following news that it was in discussions to be acquired by private equity firm Sycamore Partners.

According to The Wall Street Journal, Walgreens and Sycamore are in talks about a potential deal that could be finalized early next year. If the deal goes through, Sycamore may sell off parts of Walgreens' business or work with partners, the Journal reported.

A Walgreens spokesperson declined to comment on the reported talks.

The retail pharmacy giant's stock had fallen more than 60% for the year before its climb on Tuesday.

Despite facing challenges such as the end of the Covid pandemic, leadership changes, pharmacy reimbursement pressures, and its struggling expansion into healthcare, Walgreens has fallen short of Wall Street's earnings expectations for two consecutive quarters.

With the appointment of health-care industry veteran Tim Wentworth as CEO in October 2020, Walgreens is making efforts to recover its footing by cutting costs.

In October, Walgreens announced plans to shut down approximately 1,200 drugstores over the next three years, with 500 closures happening in fiscal 2025 alone. The company has around 8,700 locations in the U.S., with a quarter of them being unprofitable. Additionally, Walgreens has scaled back its primary care push by reducing its stake in primary-care provider VillageMD.

In the past, Walgreens has been viewed as a possible private equity target.

In 2019, KKR, a private equity firm, made a $70 billion buyout offer to the company, according to reports from the Financial Times and Bloomberg.

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