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Walgreens Boots Alliance Stock Declines Amid Buyout Setbacks

Written by : Dr. Aishwarya Sarthe

January 29, 2025

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This setback signals further difficulties for the retail pharmacy giant, which has struggled to privatize the company despite previous efforts.

Shares of Walgreens Boots Alliance (WBA) fell sharply by 4.51% today following news that its potential buyout discussions with private equity firm Sycamore Partners have encountered major obstacles, effectively leaving the deal “mostly dead.”

This setback signals further difficulties for the retail pharmacy giant, which has struggled to privatize the company despite previous efforts.

Buyout Negotiations Stall

The recent attempt to take Walgreens Boots Alliance private, targeted for early 2025, now appears to be at a standstill. Sycamore Partners, a private equity firm in talks with WBA for a buyout, reportedly hit substantial roadblocks in the negotiations.

This follows earlier failed attempts to privatize the company, including a 2019 proposal by KKR for a $70 billion acquisition, which ultimately did not come to fruition.

A key factor in the failed discussions is Walgreens' financial distress. Walgreens' market capitalization has dipped to $9.8 billion, with its stock price now trading at $11.34, reflecting concerns over its valuation.

The company’s Altman Z-Score, a metric indicating the risk of bankruptcy, has dropped to 1.68, placing it in the “distress zone.”

As a result, analysts are growing increasingly cautious about Walgreens' financial stability, as indicated by its low Piotroski F-Score of 3, which suggests poor operational efficiency.

Additionally, the company’s profitability has been on a consistent decline, with gross margins decreasing annually at a rate of 4.5%.

Financial Outlook & Investor Caution

Despite these financial difficulties, Walgreens continues to offer an 8.79% dividend yield, which, while relatively high, has dropped to a one-year low. However, its price-to-book ratio stands at 0.98, indicating that its current market value is close to its book value, while the Beneish M-Score shows that there is little indication of financial manipulation within the company.

Investors are now closely scrutinizing the company’s upcoming earnings report, due on March 28, 2025, to gauge whether there will be any shifts in its operational strategy or an adjustment to its approach toward potential acquisitions.

As Walgreens Boots Alliance faces growing financial challenges, it remains uncertain how the company will navigate the current economic climate.


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