A potential buyout of Walgreens Boots Alliance by Sycamore Partners is expected to pave the way for a three-way split of the struggling US pharmacy giant. 

Executive chair Stefano Pessina would likely retain a significant shareholding as part of the deal, according to sources familiar with the matter.

While initial plans involve taking Walgreens private as a whole, Sycamore intends to separate its three core businesses into independent units with distinct capital structures. This restructuring would divide the company into US pharmacy chain Walgreens, UK-based retailer Boots, and specialty pharma business Shields Health Solutions.

The negotiations, which have been ongoing for weeks, have faced complications due to Walgreens’ volatile share price. After news of the talks surfaced in December, the stock initially surged before declining, leaving the company with a market capitalization of approximately $9.5bn. Sources caution that discussions remain fluid and could still collapse.

Walgreens, which once had a market value exceeding $100bn in 2015, has struggled as competitors have eroded its market share. In October, the company announced plans to close 1,200 stores after reporting a nearly $9bn net loss for its 2024 fiscal year.

Pessina, who previously served as Walgreens CEO, holds nearly 17% of the company after selling Alliance Boots to the US chain in 2014. He has played a key role in the discussions, seeking a solution to Walgreens’ declining stock performance.