Editorial: A sad day dawns for Chicago's own Walgreens

Yahoo

07-03-2025

Walgreens was scheduled in two years to celebrate its 100th year as a publicly traded company. Now the storied pharmacist and retailer won't honor that milestone, because it no longer will be publicly owned.
Months after reports that the long-trusted, Deerfield-based retail giant was considering selling to a private equity firm, the $10 billion deal with New York-based Sycamore Partners was unveiled late Thursday.
The highly complex transaction involving multiple banks and many layers of financing marks anything but success for Walgreens management and Walgreens Chairman Stefano Pessina, the Italian magnate who is largely responsible for the sprawling mess this company has become. It's a low-premium waving of the white flag aimed at extricating shareholders from an investment that management clearly believes has no significant upside in any kind of reasonable time frame.
Walgreens Boots Alliance's stock topped $55 just four years ago. Thursday it closed at $10.60, and the company agreed to sell to Sycamore for $11.45 per share. Sure, there's the potential for another $3 per share for Walgreens shareholders if future divestitures pan out well, but the bottom line is many shareholders will be asked to vote to cement losses that for now are just on paper. In the deal announcement, Walgreens CEO Tim Wentworth said 'value creation will take time, focus and change that is better managed as a private company.'
Chicago's business community is breathing a sigh of relief with Sycamore's pledge to keep the corporate headquarters in the area and 'continue contributing to the communities in which it operates.' But those who've been through this buyout drill before know such promises often are forgotten after a few years. Ownership by suits in New York means decision-making gravitates east. There are no guarantees over the longer term.
For all its woes, Walgreens remains the Chicago area's largest publicly traded company measured by revenue. It employs hundreds of corporate workers locally, and that doesn't include the army of employees manning stores dotting Chicagoland. The city of Chicago by itself has more than 100 Walgreens stores, by far the most of any U.S. city.
And store closures, which already have claimed several Walgreens in minority neighborhoods of Chicago, likely will accelerate. Aldermen in affected wards cried foul earlier this year when Walgreens announced it was shuttering stores in Bronzeville, South Chicago, South Shore, Little Village and Chicago Lawn. There surely will be more.
A privately held Walgreens, with New Yorkers calling the shots, likely will feel significantly less compunction about the impact of shuttering unprofitable stores in the pharmacy chain's longtime hometown. Taking this drugstore giant private will entail getting more aggressive about jettisoning laggards — and likely doing so more quickly than a publicly traded Walgreens would have done given the political backlash that invariably comes with those moves.
There may be more to say in coming days about the future of this storied company and what it portends for Chicago. For now, we mourn this state of affairs.
Charles Walgreen began the company in 1901 after purchasing the Chicago drugstore at which he'd been a pharmacist. From there it grew to a chain and through organic expansion and acquisitions ultimately became a familiar sight in towns and cities throughout the U.S.
Pessina became Walgreens' leader, for a time as CEO and later as chairman, after engineering its combination with British drugstore chain Alliance Boots in 2014 and creating a global pharmacy chain. The company made a costly strategic mistake over the past four years by plunging into the business of primary care, acquiring several clinic operations and incurring major losses on those investments.
The losses on that strategic blunder, combined with major stressors on the traditional pharmacy business that this page has detailed before, have Walgreens where it is now: with a stock price at its lowest levels since the 1990s and a heavy debt load that is bearing down ever harder given the steady losses the company is posting.
Things looked brighter just four years ago, before the primary care expansion, as Walgreens emerged from the pandemic, buoyed in part by its key role in providing COVID vaccinations for Americans yearning to emerge from lockdown isolation. 'The role of the pharmacist and local pharmacy is now more vital than ever,' then-CEO Roz Brewer said in October 2021.
Less than two years after that, Brewer and Walgreens parted ways as those primary care investments quickly soured. Wentworth, her successor, has begun the process of getting Walgreens back to the core of what it's always done best — filling prescriptions and meeting many other day-to-day retail needs of ordinary folks. But the company braintrust seems to have concluded that turnaround will go faster out of view of public markets reacting to quarterly filings.
If Sycamore succeeds, its plan reportedly is to sell off the primary care business, separate the British and U.S. drugstore chains, and do what it takes to restore Walgreens in the U.S. to financial health. With heavy debt financing all those endeavors, there will be no room for half-measures.
Buckle up, everybody.
Submit a letter, of no more than 400 words, to the editor here or email [e-mail].