FILE PHOTO: A signboard at a counter of a Walgreens Pharmacy in Austin, TX, USA, March 26, 2018. REUTERS / Mohammad Khursheed
In recent months, Walgreens has held preliminary talks with some of the world's largest private equity firms to compile the largest ever leveraged buyout. Walgreens has a market value of $ 55 billion, and its debt stood at $ 17 billion at the end of August.
Walgreens has appointed investment bank Evercore Partners Inc ( EVR.N ) to investigate whether a deal can be made.
Many private equity firms have pushed back the idea, worried about Walgreens' business prospects and the challenges of financing the business, the sources added.
A leverage buy-out of Walgreens would likely require the participation of several private equity firms, each of them issuing large checks at a time when many of them have lost their appetite for club deal deals. Many of these acquisitions were completed during a boom before the financial crisis of 2008 and subsequently fought or collapsed.
Walgreens CEO Stefano Pessina, who is the company's largest shareholder at 16%, could inject equity into the deal to fund the deal, sources said.
Walgreens has also considered divesting part of its assets, such as its 27 percent stake in drug wholesaler AmerisourceBergen Corp ( ABC.N ) to provide more funding.
The sources were asked not to be identified because the matter is confidential. Walgreens declined to comment while Evercore did not immediately respond to a request for a comment.
Walgreens shares rose 8% to $ 64.12 on Tuesday news in New York. The stock has lost 28% in value over the past 12 months, while the S & P 500 Index .INX has gained 13%.
Reporting by Greg Roumeliotis and Mike Spector in New York; Additional coverage by Tatiana Bautzer in Sao Paulo; Edited by Rosalba O'Brien and Bill Berkrot