Walgreens considering going private via private equity leveraged buyout

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from a financial standpoint, I don't see how you are going to get enough willing to pony up the money - People (or their companies) would have to put such a large percentage (all?) of their money in one company, or be willing to work with other billionaire's to make this happen.
 
Looks like Stefano and Ornella are ready to sail off into the Mediterranean sunset...... Going private did not work out well for Toys R Us in the long term. In the short-term however....cha-ching.
 
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Doesn't a company usually drive down the stock price as much as possible, before going private? I looked it up, and Walgreens $61 stock price isn't that far off from CVS $67, I can't see how they would go private at that price.

What is the benefit for a company to go private? I understand going public to raise money. I could see maybe going back to private if a company wanted to return to its roots as a family business, but I don't see that happening with a company as huge as Walgreens.
 
BidingMyTime said:
Doesn't a company usually drive down the stock price as much as possible, before going private? I looked it up, and Walgreens $61 stock price isn't that far off from CVS $67, I can't see how they would go private at that price.

What is the benefit for a company to go private? I understand going public to raise money. I could see maybe going back to private if a company wanted to return to its roots as a family business, but I don't see that happening with a company as huge as Walgreens.
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Private equity benefits by using debt to buy the company and then they pay themselves a management fee for running the company. If the company survives great, if not they usually have made their money back through their management fees.
 
ApothNYC/LA said:
Looks like Stefano and Ornella are ready to sail off into the Mediterranean sunset...... Going private did not work out well for Toys R Us in the long term. In the short-term however....cha-ching.
Click to expand...

Walgreens isn't going anywhere sorry. Companies go broke for many reasons but reimbursement issues won't be what does in Walgreens. We filled 1.2 billion scripts this fiscal year which is up from last year.

If you look at Blockbuster it was Netflix so what is Walgreens Nextlix? Walgreens is already doing mail order. Will the company itself be different? Yes but that will cost pharmacists jobs, not hurt Walgreens.

We are trimming the fat by getting rid of stores that were failing. These store might have made a profit back in the day but I doubt it.
 
wagrxm2000 said:
Walgreens isn't going anywhere sorry. Companies go broke for many reasons but reimbursement issues won't be what does in Walgreens. We filled 1.2 billion scripts this fiscal year which is up from last year.

If you look at Blockbuster it was Netflix so what is Walgreens Nextlix? Walgreens is already doing mail order. Will the company itself be different? Yes but that will cost pharmacists jobs, not hurt Walgreens.

We are trimming the fat by getting rid of stores that were failing. These store might have made a profit back in the day but I doubt it.
Click to expand...

You're talking about different things. As a business, Walgreens is the most resistant to taking money losing (aka "market share") contracts and have been well-known to be hard negotiators about it. If Walgreens continues their business model, they are viable for the foreseeable future.

On the other hand, LBO's have little to do with the underlying business model. The Barbarians at the Gate comment was that KKR and others have taken quite reasonable businesses like RJ Reynolds and messed them up permanently in pursuit of cheap capital and reverse debt transfers. Walgreens is a ripe target for financialization. Wasson should be remembered as the biggest idiot in the business for screwing up such a good thing. Regardless of the business performance, it has as much to do now with Walgreens ability to secure cheap credit and hold leveraged debt. It's a heads-I-win, tails-you-lose situation for the bank involved.
 
BidingMyTime said:
Doesn't a company usually drive down the stock price as much as possible, before going private? I looked it up, and Walgreens $61 stock price isn't that far off from CVS $67, I can't see how they would go private at that price.

What is the benefit for a company to go private? I understand going public to raise money. I could see maybe going back to private if a company wanted to return to its roots as a family business, but I don't see that happening with a company as huge as Walgreens.
Click to expand...

I wouldn't focus on stock price, you need to look at market cap (every company has a different number of outstanding shares, - that being said, theirs are not too far apart
86b (CVS) vs 55 b (Walgreens).

But agree, it would be very difficult for a private sale of this size to go through
 
lord999 said:
You're talking about different things. As a business, Walgreens is the most resistant to taking money losing (aka "market share") contracts and have been well-known to be hard negotiators about it. If Walgreens continues their business model, they are viable for the foreseeable future.

On the other hand, LBO's have little to do with the underlying business model. The Barbarians at the Gate comment was that KKR and others have taken quite reasonable businesses like RJ Reynolds and messed them up permanently in pursuit of cheap capital and reverse debt transfers. Walgreens is a ripe target for financialization. Wasson should be remembered as the biggest idiot in the business for screwing up such a good thing. Regardless of the business performance, it has as much to do now with Walgreens ability to secure cheap credit and hold leveraged debt. It's a heads-I-win, tails-you-lose situation for the bank involved.
Click to expand...

Still not worried, yes Walgreens takes out loans. But we still end up making a billion or two after costs. Debt isn't an issue, ask the government....
 
wagrxm2000 said:
Still not worried, yes Walgreens takes out loans. But we still end up making a billion or two after costs. Debt isn't an issue, ask the government....
Click to expand...

Walgreens can’t print money.

I don’t think you understand how leverage buyout works. You should read on it...usually very bad for the workers.
 
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KKR bought out my corporate overloads then sold us to Brightsomething (Bright Source maybe? Bright Springs? I always get it wrong), a Canadian healthcare company. So far the only difference is slightly cheaper health insurance (higher deductible though). Seriously there has been zero changes on the ground. Same computers/programs, same policies, same everything. There has been more top down effort to improve our culture so if you buy into that kind of corporate double speak I suppose that is one difference (yeah for acronyms!). Personally I do kind of like the recognition cards we can give each other, but I have always been a sucker for validation.

If you're the type to ignore that noise than yeah, zero changes.

Wasn't Walgreens bought out by Boots though? So to go private they would have to buy out the Boots owned portion as well, right?
 
owlegrad said:
KKR bought out my corporate overloads then sold us to Brightsomething (Bright Source maybe? Bright Springs? I always get it wrong), a Canadian healthcare company. So far the only difference is slightly cheaper health insurance (higher deductible though). Seriously there has been zero changes on the ground. Same computers/programs, same policies, same everything. There has been more top down effort to improve our culture so if you buy into that kind of corporate double speak I suppose that is one difference (yeah for acronyms!). Personally I do kind of like the recognition cards we can give each other, but I have always been a sucker for validation.

If you're the type to ignore that noise than yeah, zero changes.

Wasn't Walgreens bought out by Boots though? So to go private they would have to buy out the Boots owned portion as well, right?
Click to expand...

No, not exactly.

www.theguardian.com

How did Pessina and KKR make £2bn out of Boots in five years?

Nils Pratley: The original buyout was highly leveraged but healthcare, it seems, really is the most recession-resistant part of the retailing economy
www.theguardian.com www.theguardian.com

So, KKR already has senior leverage to LBO the conglomerate. The question is whether or not they want to self-fund or go in with another bank. This will say whether or not you live or die as an entity, but cuts are inevitable to deal with capital outflows.

By the way, if it's OmniCare you're talking about, there are actually effects, but they are silent to you. OmniCare has huge debt liabilities that will sink the company otherwise, and there were massive HR changes that affected the older employees (you're just a spring chicken there with a 401k plan by contrast). The easiest analogous way to phrase it is that the company pays the LBO Bank for the "privilege" of the LBO Bank owning the company. It drains excess capital and saddles the entity with debt. It's as close to demontage as it gets in the modern age.

Walgreens has been a fine company, but its fate is no longer in its hands. Doesn't matter if the business works, it matters what can be extracted.
 
lord999 said:
No, not exactly.

www.theguardian.com

How did Pessina and KKR make £2bn out of Boots in five years?

Nils Pratley: The original buyout was highly leveraged but healthcare, it seems, really is the most recession-resistant part of the retailing economy
www.theguardian.com www.theguardian.com

So, KKR already has senior leverage to LBO the conglomerate. The question is whether or not they want to self-fund or go in with another bank. This will say whether or not you live or die as an entity, but cuts are inevitable to deal with capital outflows.

By the way, if it's OmniCare you're talking about, there are actually effects, but they are silent to you. OmniCare has huge debt liabilities that will sink the company otherwise, and there were massive HR changes that affected the older employees (you're just a spring chicken there with a 401k plan by contrast). The easiest analogous way to phrase it is that the company pays the LBO Bank for the "privilege" of the LBO Bank owning the company. It drains excess capital and saddles the entity with debt. It's as close to demontage as it gets in the modern age.

Walgreens has been a fine company, but its fate is no longer in its hands. Doesn't matter if the business works, it matters what can be extracted.
Click to expand...
WAGS could end up like a 50 times bigger Shopko self induced failure...i.e. sell all available assets..honk the employees..while a few money men flee with the luchre....
 
BMBiology said:
Walgreens can’t print money.

I don’t think you understand how leverage buyout works. You should read on it...usually very bad for the workers.
Click to expand...

Every large company has debt.... Again not concerned.
 
wagrxm2000 said:
Walgreens isn't going anywhere sorry. Companies go broke for many reasons but reimbursement issues won't be what does in Walgreens. We filled 1.2 billion scripts this fiscal year which is up from last year.

If you look at Blockbuster it was Netflix so what is Walgreens Nextlix? Walgreens is already doing mail order. Will the company itself be different? Yes but that will cost pharmacists jobs, not hurt Walgreens.

We are trimming the fat by getting rid of stores that were failing. These store might have made a profit back in the day but I doubt it.
Click to expand...
Pandora played at least that many songs last year...for free...think they deserve a 55 billion dollar market cap? Mail order cost to fill is nearly 1 dollar. Brick and mortar retail is at least 10. Insurance companies (and re-insurance) rule the world. Who do you think came up with those adherence KPI you need to follow. That's right insurance companies who don't have to worry about your petty probs cuz they just mail those 90 day supply diabetes, HBP and cholesterol meds off on time, every time.
 
Bubba98 said:
Pandora played at least that many songs last year...for free...think they deserve a 55 billion dollar market cap? Mail order cost to fill is nearly 1 dollar. Brick and mortar retail is at least 10. Insurance companies (and re-insurance) rule the world. Who do you think came up with those adherence KPI you need to follow. That's right insurance companies who don't have to worry about your petty probs cuz they just mail those 90 day supply diabetes, HBP and cholesterol meds off on time, every time.
Click to expand...

What does this have to do with me?

I already said Walgreens is doing more mail delivery
 
wagrxm2000 said:
What does this have to do with me?

I already said Walgreens is doing more mail delivery
Click to expand...
Walgreens doesn't own an insurance company therefore they are just a pass through like Pandora. Manufacturer->middle man->consumer. In a squeeze scenario who feels the pinch? It hasto do with you cuz it will affect you like me. I'm just not naive enough to strut around this board like i am above it all. I have been preparing for this for years. Have you?
 
Bubba98 said:
Walgreens doesn't own an insurance company therefore they are just a pass through like Pandora. Manufacturer->middle man->consumer. In a squeeze scenario who feels the pinch? It hasto do with you cuz it will affect you like me. I'm just not naive enough to strut around this board like i am above it all. I have been preparing for this for years. Have you?
Click to expand...
On a side note is anyone fascinated with the double standard of the McDonalds CEO being fired for a consensual relationship with an employee meanwhile Pessina has a Mistress as COO (or some exec position) while former McDonald's CEO Skinner is Head of the Board?
 
BMBiology said:
You also said Walgreens pharmacist salary is not going down.
Click to expand...

My salary hasn't been touched

Show me one post saying I thought current pharmacists would have their salary cut.
 
owlegrad said:
KKR bought out my corporate overloads then sold us to Brightsomething (Bright Source maybe? Bright Springs? I always get it wrong), a Canadian healthcare company. So far the only difference is slightly cheaper health insurance (higher deductible though). Seriously there has been zero changes on the ground. Same computers/programs, same policies, same everything. There has been more top down effort to improve our culture so if you buy into that kind of corporate double speak I suppose that is one difference (yeah for acronyms!). Personally I do kind of like the recognition cards we can give each other, but I have always been a sucker for validation.
Click to expand...

Glad to hear there's some positive changes at your location. Never heard about the recognition cards for mine. All I've seen since the second buyout is more automation = less tech help. It's good to know my sometimes dysfunctional location tends to be the exception rather than the norm...
 
It would be wonderful if Jeff Bezos (amazon), Jamie Dimon (JP morgan), and Warren Buffet (Berkshire Hathwaway) were the potential buyers to purchase walgreens as part of their joint venture into healthcare. The new billionaire overlords would take full advantage of all pharmacy locations and assets and find a way to actually reduce healthcare costs... so everyone wins, right?

Also, Warren Buffett Has Been Searching for a Big Acquisition. He Should Buy Walgreens.
 
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Bubba98 said:
Pandora played at least that many songs last year...for free...think they deserve a 55 billion dollar market cap?
Click to expand...

Not that this really has anything to do with anything, or maybe it does, but Pandora got bought out by Sirius.
 
grizzlesgrizzlies said:
Glad to hear there's some positive changes at your location. Never heard about the recognition cards for mine. All I've seen since the second buyout is more automation = less tech help. It's good to know my sometimes dysfunctional location tends to be the exception rather than the norm...
Click to expand...

Did y’all have a meeting where they rolled out the new mission statement and core values?

Edit: also what has been automated more?
 
owlegrad said:
Did y’all have a meeting where they rolled out the new mission statement and core values?

Edit: also what has been automated more?
Click to expand...

Not that I'm aware of. If there was a meeting I might have missed it.

We got a DOSIS blister machine this year.
 
grizzlesgrizzlies said:
Not that I'm aware of. If there was a meeting I might have missed it.

We got a DOSIS blister machine this year.
Click to expand...

I had heard about the automated carding machines but I haven’t seen them in action. I take it you are not a fan?
 
BMBiology said:
Going private means taking a boatload of debt. Walgreens assets will be on the line. Say good bye to Walgreens.
Click to expand...

You've been one of the sharper ones here, so I'll take your word as a starting point. Haven't really paid attention to Walgreens since I left them. Wouldn't be surprised. They have been dopey and clueless
 
MilknCheerios said:
It would be wonderful if Jeff Bezos (amazon), Jamie Dimon (JP morgan), and Warren Buffet (Berkshire Hathwaway) were the potential buyers to purchase walgreens as part of their joint venture into healthcare. The new billionaire overlords would take full advantage of all pharmacy locations and assets and find a way to actually reduce healthcare costs... so everyone wins, right?

Also, Warren Buffett Has Been Searching for a Big Acquisition. He Should Buy Walgreens.
Click to expand...
I could only imagine the horror of combining the working practices of Amazon with Walgreens.

Anyone here work for Pillpack? How are things since Amazon took over? I've seen some local job postings for an "Amazon Pharmacist" which was really just a Pillpack PIC. They throw the Amazon name in there, but I doubt you get the benefits or stock options of a real Amazon employee.
 
wagrxm2000 said:
Still not worried, yes Walgreens takes out loans. But we still end up making a billion or two after costs. Debt isn't an issue, ask the government....
Click to expand...

The "we" at Walgreens is Stefano Pessina and Alex Gourlay. This move is so easy to read they are cashing out. Their tenure is over and a private buy out will make more money than sellingbtheir stock.
 
johnpharm01 said:
The "we" at Walgreens is Stefano Pessina and Alex Gourlay. This move is so easy to read they are cashing out. Their tenure is over and a private buy out will make more money than sellingbtheir stock.
Click to expand...
Thanks for the info?
 
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