Another ‘go big or go home’ move by Signor Pessina. The Financial Times reports this afternoon from “people familiar with the matter” that Walgreens Boots Alliance chairman Stefano Pessina will nearly double his 17% stake in Walgreens to 30%, once the take-private sale to Sycamore Partners closes.
Sr. Pessina will be providing cash for the deal by voting 100% of his shares in favor of the transaction, then reinvesting all cash received. According to the FT, his current stake in the listed group is worth as much as $2.1bn which is a handsome chunk of change in this leveraged buyout–and also makes the LBO possible. A sale and take-private also benefits his spouse and business partner Ornella Barra, who heads up the WBA international business.
The $10 billion equity deal could be worth up to $23.7 billion if assets like VillageMD are divested, with the value of net debt, capital leases, and other items are figured in, along with spinoffs, closures, and carveups [TTA 11 Mar]. Those spinoffs are likely to include Boots in the UK, Shields Health Solutions in specialty pharmacy, other international operations, and even Walgreens’ US pharmacy business. Crain’s Chicago Business
The FT in an accompanying article points out that common shareholders are receiving a 63% bump on their current shares’ value. Bondholders who bought in better days, and saw their bonds fall to 65 cents on the dollar, may either have the bonds left outstanding or Sycamore may have to pay it off at par value.
One can only hope for Sr. Pessina that ‘go big or go home’ works out better here than it did with the buys of VillageMD and Summit Health/CityMD.
Editor’s note: expanding on an earlier comment that she offered to Walgreens in reviving a retail model, taking into account how shopping habits have changed even for those of us preferring to shop in person, and reaching out to those who are less able to shop or are far away:
- Put in or run pharmacies and related health and beauty aids (HBA) sections/aisle in supermarkets, which are already expanding their pharmacy/HBA operations. This could be branded or ‘white label’. One stop shopping. Many supermarkets have their own (Stop & Shop, Publix), but many (e.g. Acme, many Shoprites) don’t have.
- Create mobile delivery of prescriptions and HBA through mobile vans, pop-ups, and delivery services to homes, senior centers, FQHCs, clinics. Ordering would use voice, text, and online.
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