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A Closer Look At How A Walgreens Buyout Could Play Out

Jayson Derrick

Pharmacy retail chain Walgreens Boots Alliance Inc (NASDAQ: WBA) closed Wednesday at a valuation of $55 billion, but it could be worth $85 billion under a leveraged buyout, according to Fox Business.

Analyst Models $75-Per-Share Buyout 

Private equity giant KKR reportedly expressed interest in buying out Walgreens, and JPMorgan analyst Lisa Gill is modeling a deal to take place at around $75 per share, or a 21% premium from current levels, according to Fox Business.

This would value the company at $85 billion based on a debt ratio of 6.5 times and other metrics.

Walgreens' Tough Q2 

A takeout offer at $75 per share would also imply a price tag that is 15% below the stock's 52-week high of $86.31, which was recorded in early December, 2018.

Much has changed in Walgreens' business over the past year, including declining margins and a slowdown in sales amid growing competition from traditional pharmacies and new online channels.

Walgreens CEO Stefano Pessina said in the company's second-quarter report that it saw "market challenges and macro trends" in the quarter, according to Fox Business.

The CEO said it was the "most difficult quarter" since the combination with Europe's Alliance Boots created the new global drug and pharmacy store.

What's Next

If reports are accurate, a leveraged buyout of Walgreens would become the largest of its kind in history.

The stock was up 0.14% at $62.16 at the time of publication Thursday. 

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Photo by MusikAnimal via Wikimedia. 

Latest Ratings for WBA

Date Firm Action From To
Oct 2019 Downgrades Overweight Neutral
Oct 2019 Maintains Underperform
Aug 2019 Maintains Equal-Weight

View More Analyst Ratings for WBA
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