Walgreens jumps on report of potential sale of Boots chain

Lubo Ivanko/iStock Editorial via Getty Images

• Walgreens Boots Alliance(NASDAQ:WBA) rose 3.4% on a report that the pharmacy company is exploring a potential sale of its Boots chain next year.
• Walgreens (WBA) is said to have hired Goldman Sachs to work on a potential of the U.K. pharmacy chain, according to a Sky News report, which cited unidentified "City" sources. The chain may be valued at over GBP5B in a sale. It's also possible that the pharmacy/beauty chain could be spun off.
• A sale of the Boots chain, which has 2,200 stores in the U.K., would come after AmerisourceBergen (NYSE:ABC) purchased Walgreen's Alliance Healthcare businesses for ~$6.5B earlier this year.
• Walgreens (WBA) has been under pressure from investors after underperforming peer CVS Health (NYSE:CVS) and the company tapped former Starbucks executive Roz Brewer to take over for Stefano Pessina in January.
• A sale of the Boots chain would undue a strategic combination that started between the two companies in 2012, when Walgreens agreed to purchase a 45% stake in Alliance Boots for $6.7B. In 2014, Walgreens exercised an option to buy the remainder of the company.
• Also see Seeking Alpha contributor Khen Elazar's piece entitled "Walgreens Is Struggling To Grow, Yet Its Valuation Is Attractive."

Comments

[Udith Fonseka]

Boots has value beyond what the market perceives.

[Mr Dave C]

Best thing about this is that they can change their stock symbol back to WAG. I still haven't gotten used to WBA.

[No Identity]

Sell to Amazon

[goldwyn]

Walgreens simply can’t compare with CVS . All you need to do is compare the balance sheets , growth projections , management and employees and the stock prices .

[El Scorcho]

Buy for 14 Billion, sell for 5 Billion, thats the genius of WBA

[Mr Dave C]

@El Scorcho They went to the GE school of management.

[d0d0ramefasolated0]

Sell it. Spin it.

[Dividend Ambassador]

Boot Boots.

[mr2901]

Sell Boots, buy the rest of ABC.

[GLV]

‘Undue’? Sad …

[dgiinvestor]

Good. Boots is the worst drugstore/apothecary chain in Europe. Walgreens are infinitely better than Boots.

When I was in UK, Boots were always near empty of shoppers, while Sainsburys and the like bustled.

Best wishes to those still holding $WBA.

[MickeyD77]

Village/MD is the future for Walgreen. Beats the CVS Minute Clinics by a mile.

[CheeseHead1]

@MickeyD77 can you elaborate? Based on personal experience? Or based on other data?

[Jamjack]

Yes, please do elaborate. I don't go to Walgreen. I go to CVS. Mine runs very well.

[MickeyD77]

@Jamjack VillageMD is based on a different model. CVS Minute Clinics are built for one-time events (flu, cold, ear infection, etc). VillageMD is built for continuing care of patients. It is becoming increasingly harder to find a physician who will accept your insurance or Medicaid voucher. VillageMD accepts these patients and will follow them as would a regular physician for their chronic conditions (hypertension, diabetes, COPD, kidney disease, heart disease, etc). VillageMD uses a cost-effective model using nurse practitioners and physician assistants overseen by a physician. I think this model will be very popular where it is difficult to find a private physician who will accept your insurance.

[PennyPlanSupporter]

Mandatory boosters every six months for 320 million Americans equals tens of billions in new revenue for many years going forward.

"Please stick around and browse the store for 15 minutes before leaving after the injection sir or ma'am!"

[rrkaas]

@PennyPlanSupporter the company only needed a black swan pandemic as a catalyst. Imagine the opportunity cost of holding for the past decade and a half.

[PennyPlanSupporter]

@rrkaas good thing I didn't do that.

[PennyPlanSupporter]

Finally, $WBA is beginning the consolidation of the leading independent Fast Access, Neighborhood Health Clinic segment.

Selling Boots will allow them to have the cash to buy several hundred Rapid Care clinics in dozens of metro areas.

[olde1two]

Boots is a lose, lose situation. If they keep it will still lose money and completion is only going to get worse. Cut the loses and move on to fight another day

[fedinvest]

I never liked the Boots deal. Good riddance. Pessina did not know how to run an American drugstore chain. Walgreens should have bought ABC instead of Boots. Still long Walgreens. I'll give Brewer some time to turn things around.

[nkvbradenton]

If WBA ends up selling Boots chain outright, the price better be much higher than merely over 5 Billion GBP, which comes to less than $7 Billion. They paid about $10.7 Billion in cash and stock about seven years back. Not looking like a smart move if the reported consideration is accurate. Still, too early to draw concrete conclusions.

[Ol' Hickory]

Cramer said the merger was a great idea. No wonder the market is reacting as it is.

[d0d0ramefasolated0]

@NWdividend he said oil was dead last summer when the stocks were cheap. Grain of salt

[Larry Ev]

@NWdividend Cramer! Yeah, right!

[nippycat]

@NWdividend Cramer is the greatest contra-indicator in the investing world today. Buy when he says sell, sell when he says buy. He is like the anti-Buffett.

[Meepgoesmoo]

How much is Pessina and his goons making off this sale?

[toh192]

@Meepgoesmoo lots and management already saw salary increases due to the acquisition that would be deflating.

[Phil Dumfee]

Start selling Starbucks coffee at the pharmacy drive up windows.

[cross]

@Phil Dumfee that's, actually, not a completely bad idea!

[thirdcamper]

Boots stores are infinitely nicer than Walgreens stores.