Walgreens jumped aboard the private capital rescue ship called Sycamore Partners earlier this year and the agreement was completed worth $ 10 billion.
While some say that the sale to private capital was necessary since retail health faces numerous winds against, at least a follower of the industry is concerned about what is ahead for Walgreens. Private capital companies generally try to get out of a company of five to seven years after buying it.
“Medical care is a long -term industry. It is long -term health. It is about maintaining the health of people for decades. The commercial model of private capital inherently is based on the short term. They are looking to obtain a company, obtain profits from it, leave the company in any way, whether it is a bankrupt bankruptcy. That has been tracking private capital movements.
Under Sycamore, Walgreens will be divided into five independent companies: Walgreens (Pharmacy), the Boots Group (retail health and beauty business), Shields Health Solutions (Specialized Pharmacy Solutions), Freecentrix (Home Health) and Villagemdem).
Sycamore Partners and Walgreens declined to comment.
That could be ahead
There are some reasons why Parr finds this sale to Sycamore Partners.
One is that about 70% of the agreement is fined with debt, which means that Sycamore does not “have much skin in the game,” he said.
“There is a great coverage of Alrebeared Leg about Walgreens’s financial problems … and now it is attached that Sycamore is putting in that company that Alreamy has difficulties.
He added that many communities depend on Walgreens as their only pharmacy, so any financial challenge that Walgreens has will have a direct impact on consumers.
The financing of the agreement of the agreement and the worrying financial problems of Walgreens are not the only reason why it refers to Parr.
Sycamore Partners has replaced the Walgreens CEO, Tim Wentworth, with Mike Motz, who was previously the CEO of Office Retail Store Staples, another Sycamore company.
“Under that CEO watch, Staples closed a third of his stores,” he said. “It cut tens of thousands of Jobs. We’re Vary If Sycamore Applies that Same Playbook To Walgreens, If That Ceo That’s Coming Over From Stas lhousesandss of lhoussandss of lhoussss of loussss of lavessss or lave, of laysssss or laves of wash or wash or lave, laysss or lave, laysss or lave, laysss or lave, lave or wash Layssands or wash or wash, love or love, or them.
Sycamore Partners has also overcome several other high -profile bankruptcies, including Belk, Nine West and Aeropostale.
As for the Walgreens transmission in five separate companies, Parr speculates that Sycamore is trying to determine which company is the most profitable, which will probably lead to retail store closures Which are a lower margin business and layoffs in companies that are not as profitable as the others.
Not everyone has negative opinions about treatment
For Michael Gareley, co -founder and general partner of Flare Capital Partners, disaggregating that the company was the correct movement. Retailers have been fighting in recently medical care, and Walgreens’s retail business was knocking out high performance assets such as Shields and Careress.
“I think an excellent movement is a bone to disaggregate disparate assets,” he said.
Another expert in medical care echoed this, noting that Walgreens has managed to unite all its assets to a perfect experience for consumers. It is likely by which Sicomore is dividing it.
“Ultimately, the five companies have different margin profiles, cost structures and success opportunities: the company could never capitalize on the reciprocal value between each business. In comparison, CVS yes [this] With its acquisition of Caremark, which reduces its medication costs, and the fusion with AETNA created a closed circuit in the acquisition and negotiation of customers, ”said Warren Templeton, managing director of Health2047, the risk arm of the American Medical Association.
That said, there is no doubt that this agreement will lead to store closures, which will have a significant impact on unattended communities.
“They will close stores that are not profitable or that do not have the potential to generate free cash flow. And the group is, do they begin to close stores in the markets that create deserts of medical care?” Greley said.
It is also to point out that most of Sycamore’s experience has a leg in retail, not in health.
“This is not just a typical retail acquisition, which is what Sycamore is used,” said Parr. “This is a much larger number for them to manage, and Sycamore already has a history or bankruptcy of narrower retail companies. Therefore, if that same trajectory occurs with Walgreens, it is even devastating that a bank of nine west.”
Photo credit: Joe Raedle, Getty Images