By Anirban Sen and Leroy Leo
(Reuters) -Walgreens Boots Alliance is in talks to sell itself to private equity firm Sycamore Partners, according to a person familiar with the matter, the latest attempt by the pharmacy chain operator to go private after a sharp slump in share value.
Walgreens has been working with its advisers over the past few weeks and had also reached out to other potential buyers but is currently in talks with only Sycamore, the source said.
A potential deal is most likely to be signed by early next year, the source said.
Walgreens and Sycamore declined to comment.
Shares of the second-largest U.S. pharmacy chain operator surged about 18% following the news.
If the talks are successful, it could be Sycamore's biggest deal after Walgreens' market capitalization reached $9 billion following Tuesday's rally.
In comparison, Silver Lake said in April it was taking talent and entertainment agency Endeavor Group Holdings private for $13 billion, one of the largest private equity deals in recent times.
The pharmacy chain operator also had long-term debt of $8.04 billion, as of Aug. 31.
Walgreens had previously attempted to go private in 2019 when it was valued at more than $55 billion but was unsuccessful. Private equity group KKR had also approached the drugstore chain with a buyout proposal at the time, according to media reports.
Walgreens' retail business has struggled with weak consumer spending due to sticky inflation and its pharmacy operation has faced low reimbursement rates for filing prescriptions.
The company also operates the Boots retail and pharmacy chain in the UK, which it has been looking to sell for several years.
Walgreens saw a change in management last year, with CEO Rosalind Brewer abruptly stepping down in September last year. Healthcare industry veteran Tim Wentworth took her place and has since announced the removal of multiple mid-level executives, a $1 billion cost-cutting plan and closure of 1,200 stores over the next three years.
This year, its stock has fallen more than 60% through Monday.
Leerink analyst Michael Cherny said he was not surprised with the reported talks as Walgreens has explored a number of different avenues "in what has been a steadily eroding earnings story".
The Wall Street Journal had first reported the news.