Today, Walgreens Boots Alliance (WBA) released a statement that a private equity firm, Sycamore Parters, offered to take the company private and WBA accepted pending shareholder approval. Here is the deal structure:
- The deal is estimated to close in Q4 of 2025.
- $11.45/sh in cash
- Up to $3.00 in additional cash at a future time.
- This second portion would be done using a “Divested Asset Proceed Right” (“DAP Right”) for its investments
- This means that WBA is looking for a company to buy VillageMD (VMD) from them and then they will distribute 70% of the proceeds to DAPholders
- The current debt is $3.4b but it will go up 19% annually
- If a company paid $3.4b on day one, DAPholders would get $2.75
- In order to get the full $3 the interest would have to move the debt amount from $3.4b up to $3.7b
- Any amount less than that will be given to DAPholders at a 70% split
Currently, WBA is soliciting other offers to see if there is a better deal for shareholders. My plan is to wait until that process is done and then I will sell my shares. I would also consider selling my shares earlier than that if the price goes above $13.00/sh without news about a new offer. This would reflect a sale price of a little over $5B which is what my uneducated guess is that VillageMD will sell for unless they have had some really good numbers recently. I will also hold onto my shares after the 35 day period if the stock price is still less than $11.50/sh.