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Sycamore Partners said on Thursday it has completed its acquisition of Walgreens Boots Alliance and named retail veteran Mike Motz as CEO of the drugstore chain.
As a result of the acquisition, each of the former WBA divisions—Walgreens, The Boots Group, Shields Health Solutions, CareCentrix, and VillageMD—will now operate as separate, privately owned companies.
Motz was previously CEO of Staples US Retail, which is also owned by Sycamore Partners, and before that he was chief operating officer of Loblaw Cos. in Canada and president of Shoppers Drug Mart, a division of Loblaw. In 2021 he was named to the board of directors of Moran Foods, the parent of Save-A-Lot.
Motz succeeds Tim Wentworth, who had been leading a massive reorganization effort at the company that included the divestiture of auxiliary businesses, the planned closure of 1,200 underperforming stores, and other cost-saving initiatives. Wentworth will continue to serve as a director, and John Lederer, a former director of WBA and a senior advisor to Sycamore, was named executive chairman of Walgreens.
“Today represents an exciting new chapter and a turning point for Walgreens,” said Motz. “As a private organization, alongside our dedicated team members, we are renewing our focus on our core pharmacy and retail platform, our stores and our customer experience—building on the progress that’s been made.”
A spokesperson for Walgreens could not be reached for comment about Motz’s specific plans for Walgreens going forward.
Acquisition ends Walgreens’ 98-year run as public company
New York-based Sycamore, in partnership with Walgreens investor Stefano Pessina, in March announced plans to by WBA for about $10 billion, ending Walgreens’ 98-year run as a publicly traded company.
Walgreens for the past several years had been seeking to become a more holistic provider of health and beauty care services through the acquisition of other companies, including Boots and VillageMD, but those efforts failed to insulate the retailer from competitive pressures and other challenges. The company has been suffering sales declines in front-of-store categories, reflecting competition from other channels such as dollar stores and online retailers, and it has seen its profit margins squeezed in the pharmacy from declining reimbursement rates.
Walgreens in June reported a 2.4% decline in comparable-store sales for its fiscal third quarter, relative to a year ago, although comparable pharmacy sales increased 14.6%. Total sales in the quarter were up 7.2%, to $39 billion, but the company reported an adjusted operating income decline of 8.3% and a net loss of $175 million.
The acquisition comes as Walgreens’ rival CVS Health appears to be gaining traction. Last month CVS reported second-quarter gains in sales and profitability and boosted its outlook for the full year. Meanwhile Rite Aid, which had long been one of the “big three” retail drugstore chains, is finalizing its liquidation through the sale of all of its assets.
With the completion of the acquisition, shareholders of WBA’s common stock will receive $11.45 per share in cash, plus up to $3 in cash per WBA share from the net proceeds of the future monetization of WBA’s debt and equity interests in VillageMD, which includes the Village Medical, Summit Health, and CityMD businesses.
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