Walgreens Can’t Take Heat, Gets out Kitchen
Walgreens Boots Alliance wants to ditch investors and make history in the process. The pharmacy chain wants off the stock exchange and is pleading with the world of private equity to take it back in a massive leveraged buyout.
Private equity (PE) investors own private companies that you can’t find on a stock exchange. They’re fat cat suit-and-tie types, working in the shadows, making riskier deals but potentially more money than on the stock market. Technically, all companies start life in the PE underworld, which sees 23 times the amount of dollars get lumped around than in public markets. However, it’s rare to see big names get dragged back there, long after taking to an exchange. Walgreens Boots Alliance (WBA), explain yourself!
Well, apparently, this is all our fault! Every quarter, millions of investors jump on WBA’s back and lambast it for a stale stock price. It’s a company facing headwinds, and it’s sick of being everyone’s favorite short! That’s why the pharmacy sent out an SOS to the private equity world on Tuesday, but the problem is, Walgreens Boots Alliance is just too darn big! $70 billion dollars of market value need reabsorbing, so this will be a team effort!
First, takers are needed. Surely, there must be someone out there willing to burn their clients’ money on a dying wholesale pharmacy business. The question is whether they’re able to write a large check. WBA could help their own cause by divesting subsidiary AmerisourceBergen, and the CEO could help too, by rolling his 16% stake into the deal. Still, a bank will be needed to lend private investors the money to afford this. Buffett, interested?
With interest rates on the floor, this could definitely happen. The stock first jumped 15% in anticipation of a big premium being paid for Walgreens, but taking the opioid crisis into account; investors have pruned back those expectations. The share price dropped 2% yesterday, but follow the news carefully, and you could play this one in real-time!