Sycamore acquires Walgreens, raises alarms over debt and bankruptcy risk

Private Equity Firm Sycamore Partners Finalizes Acquisition of Walgreens, Raising Alarms Over Debt and Bankruptcy Risk

Debt-heavy buyout raises fears of store closures, layoffs, and bankruptcy

Chicago, IL – Today, private equity firm Sycamore Partners announced it has finalized its $22+ billion acquisition of Walgreens, immediately unveiling plans to split the company into five standalone businesses: Walgreens, The Boots Group, Shields Health Solutions, CareCentrix, and VillageMD.

The Private Equity Stakeholder Project (PESP) warned that this move raises serious concerns for patients, workers, and communities across the United States. Walgreens operates thousands of U.S. pharmacies and employs more than 220,000 people domestically, serving millions of patients daily.

“This isn’t just a corporate reshuffling, it’s a debt-driven takeover that puts patients, workers, and entire communities at risk,” said Jim Baker, Executive Director of the Private Equity Stakeholder Project. “Sycamore’s track record of bankruptcies, layoffs, and cost-cutting shows what could be ahead: fewer pharmacies in communities that already struggle with access, job losses for tens of thousands of workers, and resources stripped away from essential patient care.”

The risks of bankruptcy are especially troubling. In the first quarter of this year alone, 70% of large U.S. corporate bankruptcies involved private equity-owned companies, despite private equity making up only 6.5% of the economy. Walgreens’ massive debt load from this buyout could make it the next household name pushed into financial distress by Wall Street’s short-term model. Sycamore Partners financed the acquisition with an unusually high level of debt, more than the average in most private equity buyouts. (70.9% debt based on Walgreens’ June 6 DEFM14A filing)

After months of discussions with Sycamore Partners about the buyout, Walgreens late last year announced plans to close 1,200 stores. Store closures could accelerate under Sycamore Partners’ ownership. Research shows that pharmacy closures disproportionately impact low-income, rural, and minority communities, and can create “pharmacy deserts” where patients lose access to essential medications and services.

Additionally, private equity firm Sycamore Partners appointed the Staples CEO to run Walgreens upon acquiring the company. Sycamore Partners also currently owns Staples. If Sycamore closes as many stores at Walgreens as it did at Staples (33%), it could mean over 70,000 layoffs.

The Walgreens acquisition is the latest example of private equity’s growing footprint in healthcare, which has too often led to higher costs, reduced quality of care, widespread job losses—and rising bankruptcy risks.