FILE PHOTO: A sign rests on a counter in a Walgreens pharmacy store in Austin, TX, USA, March 26, 2018. REUTERS / Mohammad Khursheed
Over the past few months, Walgreens has had preliminary discussions with some of the world's largest private equity companies to put together what would be the largest acquisition ever utilized, the sources said. Walgreens has a market value of $ 55 billion, and its debt at the end of August was $ 17 billion.
Walgreens has commissioned the investment bank Evercore Partners Inc ( EVR.N ) to investigate whether a deal can be put together, the sources said, warning that a deal is far from secure.
Many private equity companies have pushed the idea back, worried about Walgreens & # 39; s business opportunities and the challenges of financing the deal, the sources added.
An exploited acquisition of Walgreens is likely to require the participation of several private equity companies, each of which writes large checks, at a time when many of them have lost the desire to merge into so-called club agreements. Many of these acquisitions were completed during a boom prior to the 2008 financial crisis and then erased or collapsed.
Walgreens CEO Stefano Pessina, who is the company's largest shareholder with a 16% stake, can roll its equity into the deal to fund the transaction, says one of the sources.
Walgreens has also thought of divesting some of its assets, such as its 27% stake in drug wholesaler AmerisourceBergen Corp ( ABC.N ), to provide more funding, one of the sources adds .
The sources asked not to be identified because the case is confidential. Walgreens declined to comment, while Evercore did not immediately respond to a request for comment.
Walgreens shares rose 8% to $ 64.12 in New York in the news Tuesday. The stock had lost 28% of its value over the past 12 months, compared with a 13% increase in the S&P 500 index. INX.
Reporting by Greg Roumeliotis and Mike Spector in New York; Additional reporting by Tatiana Bautzer in Sao Paulo; Editing by Rosalba O & # 39; Brien and Bill Berkrot