People walk past a Walgreens on November 3, 2024 in Brookline, Massachusetts.
Danielle DeVries | CNBC
Actions of Walgreens jumped about 20% on Tuesday following a report that the company is in talks to sell itself to private equity firm Sycamore Partners.
Walgreens and Sycamore have been discussing a deal that could be completed early next year, The Wall Street Journal reported, citing people familiar with the matter. New York-based Sycamore would likely sell parts of Walgreens' business or work with partners, the Journal reported.
A Walgreens spokesperson declined to comment on the reported conversations.
The report comes during a difficult period for the retail pharmaceutical giant. The company's shares fell more than 60% for the year before their rise on Tuesday.
Walgreens, pressured by the transition out of the Covid pandemic, a leadership shakeup, pharmacy reimbursement hurdles and its faltering push into health care, has underperformed Wall Street earnings expectations for two consecutive quarters. Walgreens' pharmacy business in particular has been reeling due to falling prescription drug reimbursement rates and various factors putting pressure on the front of the store, such as inflation and increased competition.
The company is trying to regain its footing with a new CEO, healthcare industry veteran Tim Wentworth. Since taking over in October 2023, Wentworth has taken steps to reduce costs at Walgreens.
In October, Walgreens said it plans to close about 1,200 of its pharmacies over the next three years, including 500 in fiscal 2025 alone. Walgreens has about 8,700 locations in the United States, a quarter of which it says are not profitable. The company has also reduced its push into primary care by cutting its stake in primary care provider VillageMD.
Walgreens has reportedly been viewed as a potential private equity target in the past.
In 2019, private equity firm KKR made a roughly $70 billion takeover offer to the company, the Financial Times and Bloomberg reported at the time.
