Drugstore chain Walgreens Boots Alliance's (WBA) - Get Walgreens Boots Alliance Inc. Report reported $50 billion leveraged buyout plan to take itself private is facing financing-related challenges as the private-equity world struggles with how much money it can potentially lend companies amid pushback from their own investors.
Shares of Walgreens have been generally moving higher since mid-November on reports that private-equity giant KKR (KKR) - Get KKR & Co. Inc. Report formally approached the drugstore group with a proposed leveraged buyout plan to take itself private.
However, The Wall Street Journal reported on Monday that financing the deal, which has been described as the biggest leveraged buyout in U.S. corporate history, is facing challenges as loan buyers have begun pushing back on what terms they are willing to accept.
Specifically, the Journal noted that the parties "haven't been in the same ballpark on valuation" with respect to Walgreens, and that no deal appears imminent.
The largest leveraged buyout to date was the 2007 sale of utility TXU to Kohlberg Kravis Roberts and TPG. That deal was valued at about $45 billion including debt.
For fiscal 2019 ended Aug. 31, Walgreens' net income fell to $4.31 a share from $5.05. Adjusted earnings were $5.99 a share vs. $6.02. Revenue rose 4.1% to $136.9 billion.
Walgreens Boots Alliance was formed at the end of 2014 when Walgreen merged with Boots of the U.K. and Switzerland. The chain operates Walgreens and Duane Reade drugstores in the U.S. as well as Boots outlets in the U.K.
Shares of Walgreens ended the trading day Friday down 0.85%, or 51 cents a share, at $59.60. The stock has gained around 16% over the past three months, giving the Deerfield, Illinois-based group a valuation of just over $50 billion.