A leveraged buyout (LBO) of Walgreens Boots Alliance by Sycamore Partners, backed by over $18 billion in financing, is set to become one of the most significant healthcare acquisitions since the global financial crisis, according to an LCD analysis.
The struggling retail pharmacy giant has agreed to be acquired by Sycamore Partners in a deal valued at up to $23.7 billion, which includes debt assumption and potential future payouts. This transaction places Walgreens among the largest healthcare buyouts since the Federal Reserve began raising interest rates three years ago.
Breaking Down the Walgreens Buyout Financing Structure
The total financing package for the deal amounts to $18.2 billion, with $4 billion structured as a bridge loan likely to be refinanced. The package includes $14.2 billion in new debt, of which $4.5 billion comes from private loans.
According to PitchBook, this deal ranks as the third-largest healthcare LBO in the U.S. and Europe, or the second-largest since the 2008 financial crisis.
As part of the agreement, Sycamore-affiliated funds have committed $2.5 billion, according to an SEC filing. The transaction also includes a $30 million termination fee should the deal not go through.
Key Debt Commitments and Financing Partners
The deal’s financing is spread across multiple facilities and investors, as detailed in a March 10 SEC filing:
U.S. Retail Pharmacy Business
- $5 billion ABL (Asset-Based Lending) facility provided by Wells Fargo, Citi, Deutsche Bank, Goldman Sachs, JPMorgan, UBS, Mizuho, and PNC Capital Markets.
- $2.5 billion senior secured first-in-last-out term loan facility from Sixth Street Partners, Ares Capital Management, Oaktree Capital Management, Pathlight Capital, Callodine Commercial Finance, and Callodine Credit Management.
- $1 billion receivables purchase facility from Wells Fargo.
International Business Financing
- $850 million ABL facility from JPMorgan, Goldman Sachs, UBS, Citi, Deutsche Bank, Wells Fargo, Mizuho, and PNC.
- $2.25 billion senior secured term loan facility.
- $2 billion senior secured bridge facility.
Preferred Equity and Additional Funding
- $1.25 billion in preferred equity provided by GoldenTree Asset Management LP.
- $100 million senior secured cash flow revolving credit facility for Walgreens’ Shields business from HPS Investment Partners, Goldman Sachs Asset Management, and JPMorgan.
- $2.5 billion senior secured term loan facility backing Shields, with pricing reportedly at SOFR+600 bps according to Bloomberg.
- $2 billion senior secured bridge facility provided by UBS.
- $577 million loan secured by real property assets.
The Impact on Walgreens Bonds and the Lending Market
Speculation over the Walgreens buyout financing has already pushed the company’s bonds higher, as investors anticipate refinancing opportunities.
Given the scale of this transaction, banks and private credit lenders have chosen to collaborate rather than compete, highlighting the rising trend of hybrid financing structures. Borrowers increasingly rely on a combination of syndicated and private debt—a strategy recently seen in deals like the UK-based insurance distribution platform Ardonagh.
Banks and private credit firms continue to strengthen their collaboration through strategic partnerships. LCD data shows a sharp increase in these partnerships, rising from just three in 2023 to 17 in 2024, as banks look to expand their footprint in the private credit market.
The Walgreens Boots Alliance acquisition highlights a broader shift in private equity and credit markets, where syndicated loans and private lending now converge to support large-scale transactions. With Sycamore Partners leading this landmark LBO, the deal not only reshapes Walgreens’ future but also underscores the growing influence of private credit in corporate acquisitions.
As the transaction progresses, the effectiveness of its financing structure will likely set a precedent for future healthcare and retail buyouts. This buyout marks another significant milestone in the ongoing evolution of leveraged buyouts in a high-interest-rate environment.
