What You Ought to Know:
– The latest acquisition of Walgreens Boots Alliance by non-public fairness agency Sycamore Partners is drawing scrutiny as a result of excessive degree of debt financing concerned and questions surrounding Sycamore’s fairness dedication.
– Based on a Securities and Exchange Commission (SEC) filing, 83.4% of the financing for the Walgreens buyout is debt, totaling $22.5B. That is greater than double the common debt degree (41%) utilized in non-public fairness acquisitions final yr.
PESP Raises Alarms About Potential Dangers
The non-profit watchdog Private Equity Stakeholder Project (PESP) has launched a press release expressing concern in regards to the leveraged buyout of Walgreens. PESP emphasizes the dangers related to non-public fairness funding in healthcare corporations, citing the potential for:
- Elevated chapter threat: Leveraged buyouts usually saddle corporations with substantial debt, draining sources that might be used for funding and progress.
- Jeopardized affected person care: Price-cutting measures carried out to service debt can negatively impression affected person care and entry to mandatory drugs.
- Job insecurity: Restructuring and potential bankruptcies can result in job losses and financial disruption in communities.
Sycamore Companions’ Historical past of Bankruptcies
PESP highlights Sycamore Companions’ historical past of bankruptcies at portfolio corporations, together with Belk and 9 West. The chapter of 9 West resulted within the closure of 70 shops and mass layoffs. One other retailer, Aeropostale, claimed that onerous phrases from Sycamore Companions-owned attire sourcing firm contributed to its chapter.
Walgreens’ Workforce and Neighborhood Impression
Walgreens Boots Alliance employs roughly 312,000 staff. PESP emphasizes the significance of Walgreens’ function in offering entry to prescribed drugs and its important impression on the communities it serves. The group expresses concern that the non-public fairness buyout mannequin may negatively impression these stakeholders.
