Sycamore Partners to finance Walgreens buyout with 83% debt
March 11, 2025
Sycamore Partners proposing to finance $22 billion Walgreens buyout with 83% debt
More than double the average debt level (41%) used by private equity firms to acquire companies last year
Based on the financing commitments Walgreens disclosed in a March 10 filing with the Securities and Exchange Commission, 83.4% of the financing for Sycamore Partners’ proposed buyout of Walgreens is debt (see below table).[1]
This is more than double the average debt level (41%) used by private equity firms to acquire companies last year.[2]
For its $2.5 billion equity commitment (11.1% of financing commitments), Sycamore Partners has pledged capital that it does not appear to have. Sycamore Partners is making its equity commitment through Sycamore Partners III LP.[3] Sycamore Partners III is a 2017 buyout fund that had $1.29 billion in capital available to invest as of the end of 2024, per data provider Pitchbook.[4]
In 2018, the Wall Street Journal noted, “With Sycamore’s strategy, it isn’t necessary to spruce up a purchased company. The firm often buys struggling retailers and sells off their most valuable pieces. It cuts costs at whatever remains, sometimes using the savings to extract dividends.”[5] The pieces that are not sold may end up in bankruptcy. Sycamore Partners owned Belk and Nine West when they filed for bankruptcy.[6] In the case of Nine West, this meant the closure of 70 stores and mass layoffs.[7] Aeropostale, another retailer, claimed that onerous terms from Sycamore Partners-owned apparel sourcing company MGF Sourcing helped push it into bankruptcy.[8]
Walgreens Boots Alliance employed 312,000 workers as of August 2024.[9]
The Private Equity Stakeholder Project released the following statement on Sycamore Partners’ use of debt to acquire Walgreens:
“The amount of debt in the Walgreens acquisition is concerning, in addition to Sycamore Partners pledging capital that it does not appear to have.
“This leveraged buyout tactic saddles private equity-owned companies with substantial debt, often draining resources that could otherwise be invested in innovation, workforce development, or adapting to market changes.
“Instead, companies under private equity ownership must channel much of their revenue toward servicing this debt, leaving them vulnerable to financial distress and bankruptcy.
“Sycamore Partners, in particular, has demonstrated problems at the portfolio companies it has owned. Under Sycamore Partners’ ownership, multiple companies, including Belk and Nine West, have filed for bankruptcy.
“The heightened risk of bankruptcy threatens job security for workers, disrupts services for consumers and patients, and creates ripple effects across local economies.”
| Financing Commitment | Commitment | % | Type | Commitment Letter |
| Sycamore Partners III L.P. | $2,500,000,000 | 11.1% | equity | Equity Commitment Letter |
| Preferred equity (GoldenTree Asset Management LP) | $1,250,000,000 | 5.5% | equity | Preferred Equity Commitment Letter |
| Senior secured asset-based revolving credit facility (Wells Fargo, Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan Chase, UBS, Mizuho, PNC Bank) | $5,000,000,000 | 22.2% | debt | USR ABL Commitment Letter |
| Senior secured first-in-last-out term loan facility (Sixth Street Partners, Ares Capital, Oaktree Capital, Pathlight Capital, Callodine) | $2,500,000,000 | 11.1% | debt | USR FILO Commitment Letter |
| Receivables purchase facility (Wells Fargo) | $1,000,000,000 | 4.4% | debt | USR Factoring Commitment Letter |
| Senior secured asset-based revolving credit facility (Wells Fargo, Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan Chase, UBS, Mizuho, PNC Bank) | $850,000,000 | 3.8% | debt | International Commitment Letter |
| Senior secured term loan facility (Wells Fargo, Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan Chase, UBS, Mizuho, PNC Bank) | $2,250,000,000 | 10.0% | debt | International Commitment Letter |
| Senior secured bridge facility (Wells Fargo, Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan Chase, UBS, Mizuho, PNC Bank) | $2,000,000,000 | 8.9% | debt | International Commitment Letter |
| Senior secured cash-flow revolving credit facility (HPS Investment Partners, Goldman Sachs, JPMorgan) | $100,000,000 | 0.4% | debt | Shields Commitment Letter |
| Senior secured term loan facility (HPS Investment Partners, Goldman Sachs, JPMorgan) | $2,500,000,000 | 11.1% | debt | Shields Commitment Letter |
| Senior secured bridge facility (UBS) | $2,000,000,000 | 8.9% | debt | Bridge Commitment Letter |
| Loan secured by certain real property (UBS, Wells Fargo) | $577,000,000 | 2.6% | debt | Real Estate Financing Commitment Letter |
| Total | $22,527,000,000 | |||
| (Source: Walgreens Boots SEC form DEFA14A, 3/10/25) |
Resources
[1] Walgreens Boots Alliance form DEFA14A, March 10, 2025. https://www.sec.gov/Archives/edgar/data/1618921/000119312525050097/0001193125-25-050097-index.htm
[2] Based on average North American deal multiple of 11.9x EBITDA, average debt ratio of 4.9x EBITDA, Global Private Equity Report 2025, Bain & Company, p.12. https://www.bain.com/globalassets/noindex/2025/bain-report_global-private-equity-report-2025.pdf
[3] Walgreens Boots Alliance form DEFA14A, March 10, 2025. https://www.sec.gov/Archives/edgar/data/1618921/000119312525050097/0001193125-25-050097-index.htm
[4] Sycamore Partners III, Pitchbook, accessed March 11, 2025. https://my.pitchbook.com/profile/16325-47F/fund/profile
[5]https://www.wsj.com/articles/how-one-investor-made-a-fortune-picking-over-the-retail-apocalypse-1521643491
[6]https://www.retaildive.com/news/belk-files-for-bankruptcy-eyes-lightning-fast-exit/595618/, https://www.retaildive.com/news/nine-west-lenders-look-to-sue-sycamore-over-outright-fraud/539897/
[7] https://rebusinessonline.com/retailer-nine-west-files-for-bankruptcy-will-close-all-stores/
[8]https://www.reuters.com/article/us-aeropostale-bankruptcy/aeropostale-accuses-sycamore-partners-of-loan-to-own-scheme-idUSKCN1030TE
[9] Walgreens Boots Alliance form 10-K, October 15, 2024. https://www.sec.gov/ix?doc=/Archives/edgar/data/0001618921/000161892124000084/wba-20240831.htm
