CONSUMER STAPLES: Walgreen Boots; Sycamore announces $10b ($24b EV) buyout
(WBA: B1 Neg/BB- Stable)
History being made here as top-10 US retailer Walgreens along with 175 year-old UK Boots chain (8% of group) and the German wholesale pharmaceutical business (8%) is taken private by Sycamore. It is the first step to unlocking a CoC @ 101, with both raters needing to downgrade now. $ long-end is where the action has been, they have not had time to react yet, reminder on the ($26s/30s/46s/50s) we see mention to all three (instead of two) raters requiring downgrade (please double check docs yourselves). No financing details mentioned but even on conservative 60% debt funding on the non-Pessina 83% equity (~$5b), we see enough for downgrades. Leaks earlier in the week (that haven now proven to be reliable) was up to $12b debt package being looked at by Sycamore.
- Cash consideration of $11.45/share ($10b) - top end of the leaked $11.3-$11.40 range
- Another $3/share ($2.7b) when it divests VillageMD clinics in the future
- Chairman Pessina who holds 17% has approved the deal and will reinvest his stake back in cash
- Will help lower funding needs for Sycamore ($8.3b remaining equity value)
- We see CoC only requiring 50% to change hands
- A "go-shop" period of 35 days when WBA can solicit other buyers/interest
- Sycamore has obtained fully committed financing
- Expected close 4Q of CY25 (Oct-Dec '25)