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Walgreens Boots Alliance’s executive chair Stefano Pessina will almost double his stake in the US pharmacy group to about 30 per cent as part of its takeover by private equity group Sycamore, according to people familiar with the matter.
Sycamore agreed to take Walgreens private earlier this month in a deal worth up to $23.7bn including debt, paving the way for a potential break-up of the struggling US group, which also includes UK pharmacy chain Boots.
Pessina, who is Walgreens’ biggest shareholder with a stake of about 17 per cent in the company he helped forge through the 2014 merger of US-based Walgreens and Alliance Boots, will inject cash into it as part of the deal.
His raised stake in the business demonstrates the extent to which Pessina, previously Walgreens’ chief executive, will deepen his involvement in the group ahead of a possible break-up. His current stake in the listed group is worth as much as $2.1bn.
The complex debt financing involved in the transaction will give Sycamore the flexibility to divide up Walgreens, Boots, speciality pharma unit Shields Health Solutions and primary care business VillageMD into independent businesses.
That could tee up the revival of a possible sale of Boots, following previous failed efforts to sell the chain that has been a presence on UK high streets for almost two centuries.
Pessina has proven to be an irrepressible dealmaker since he took over his family’s pharma wholesaler in Italy in 1977.
Along with his spouse and business partner Ornella Barra, who oversees Walgreens’ business outside the US, he built up European drugs wholesaler Alliance UniChem through a series of deals in the years leading up to its merger with Boots in 2006.
Pessina and private equity firm KKR took Alliance Boots private a year later, in Europe’s then-biggest buyout, before Walgreens ultimately took it over in 2014. Pessina led the combined group from 2015 to 2021.
Walgreens’ market value reached a high of more than $100bn soon after the 2014 merger, but fell to less than $10bn over the following decade as it navigated various challenges including the rise of ecommerce competitors. The deal with Sycamore gives the group an equity value of about $10bn.
Pessina was central to the takeover talks as he had sought to find a solution for the group’s plunging share price, people familiar with the matter previously said.
Walgreens had announced that Pessina would invest cash into the deal and would maintain a significant equity holding in the businesses, but had not specified how much of the new entity he would own. Walgreens is in the middle of a 35-day-period to solicit and entertain rival bids.
Pessina and Sycamore declined to comment. Walgreens did not immediately respond to a request for comment.
Additional reporting by Amelia Pollard
