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Walgreens Boots Alliance has struck a deal worth up to $23.7bn with private equity group Sycamore Partners that will bring the struggling pharmacy chain’s century-long run as a public company to an end.

Sycamore agreed to pay $11.45 a share to take Walgreens private, valuing its stock at a nearly 30 per cent premium to before deal talks were first reported in December and giving it an equity value of about $10bn, the pharmacy chain said on Thursday.

Sycamore is likely to hold on to the US retail business and sell or spin off the remainder, which includes the UK pharmacy chain Boots, as part of a three-way split, the Financial Times previously reported.

Walgreens’ shareholders could be paid an extra $3 a share based on the sale of Walgreens’ primary care business VillageMD, valuing the business including debt at as much as $23.7bn.

As part of the deal, Italian billionaire Stefano Pessina, Walgreens’ executive chair and largest shareholder, will maintain a sizeable minority shareholding in the business.

The take-private transaction will end Walgreens’ 97-year run as a listed company. As part of the agreement, Walgreens will have 35 days to solicit and entertain rivals bids.

Pessina forged Walgreens Boots Alliance by orchestrating a merger of US-based Walgreens with Alliance Boots of Europe in 2014. Formerly chief executive of the combined group from 2015 to 2021, he holds a 17 per cent stake in the company. 

The company owns thousands of stores, including Walgreens and Duane Reade pharmacies in the US. Its revenues totalled $148bn in its latest fiscal year.

Walgreens’ market value peaked at more than $100bn soon after the 2014 merger closed. But it dwindled to less than $10bn in the ensuing decade as the company spent billions to add drugstores just as ecommerce ate into sales of general merchandise and pharmacy benefit managers were grinding down reimbursement rates for prescription medicines. 

Walgreens in late 2019 turned down a take-private offer from private equity group KKR valuing the business at more than $70bn.

The company expanded into healthcare, spending $5.2bn in 2021 to take a controlling stake in the VillageMD network of primary-care doctors’ offices. VillageMD then paid $8.9bn for Summit Health-City MD, a US urgent care and physicians’ group. Walgreens has been trying to offload VillageMD for more than a year.

Tim Wentworth, Walgreens’ chief executive, said the company’s “ambitious turnaround plans” would be easier to execute as a private company.

“Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds,” he added.

The company said it would keep its longtime headquarters in the Chicago region.

The Walgreens’ acquisition represents a big bet for Sycamore, which has about $10bn of assets under management. Sycamore’s marquee deal to date was its $7bn acquisition of office supply retailer Staples, which was also losing business to ecommerce rivals.

Sycamore has secured more than $10bn of debt financing from banks and private credit lenders, including Ares Management, HPS Investment Partners, JPMorgan Chase and Goldman Sachs.

The lenders have committed to finance the three individual units distinctly in a complex transaction, with those lending to the troubled Walgreens US business requiring the company to secure its debt against the value of inventories, including prescriptions, a person familiar with the matter said.