Barbarians at the Drugstore?

It's the 1980s all over again! KKR has formally approached drugstore giant Walgreens Boots about a deal to take the company private in what would be the largest leveraged buyout ever, according to reports. Both companies refused to comment. The New York-based private equity firm has been preparing a proposal to potentially buy out shareholders of Walgreens Boots, said sources, who asked not to be identified because discussions are private. It’s unclear how feasible the transaction would be, given the need for large amounts of financing, and Walgreens Boots and KKR could decide against pursuing a deal, the people said. Walgreens Boots shares closed 5% higher to $62.25 on Monday in New York. Its bonds in Europe fell.

Walgreens Boots, led by Chief Executive Officer Stefano Pessina, has been reviewing a potential deal with a financial adviser to take the company private amid buyout interest, Bloomberg News reported last week. Some buyout firms looked but decided against pursuing such a big deal, people with knowledge of the matter said at the time. There’s no certainty the deliberations will lead to a definitive takeover offer, the people said. 


Walgreens Boots is the largest retail pharmacy in the US and Europe, with more than 18,750 stores in 11 countries, according to its most recent annual report. It is a major retailer in household and personal products industry. Its wholesale arm has more than 400 distribution centers that deliver to more than 240,000 pharmacies, doctors, health centers and hospitals. It operates Walgreens and Duane Reade stores in the US and Boots outlets in Europe and Asia. Three-quarters of its revenue stems from the US pharmacy business.


KKR rose to infamy in the 1980s when LBOs first appeared on Wall Street. In 1988, RJR Nabisco was purchased by Kohlberg Kravis Roberts & Co. (KKR) in what was at the time the largest leveraged buyout in history. Many considered it the preeminent example of corporate  greed. The deal was the subject of a book and a movie, Barbarians At the Gate.