Sen. Warren fears $10B private equity buyout of Walgreens will create ‘pharmacy deserts’
Sen. Elizabeth Warren (D-Mass.) has sent an open letter to Sycamore Partners, the private equity firm set to buy the pharmacy chain Walgreens, seeking assurances it will not create “pharmacy deserts” through mass store closures.
The $10 billion acquisition is being financed largely with debt—as much as 83%, a report from the Private Equity Stakeholder Project revealed. Warren fears this heightens the risk of Walgreens going bankrupt, resulting in layoffs and shuttered stores.
Warren said Sycamore Partners has a “troubling history of failed corporate buyouts” adding that there are also additional “unique concerns” associated with the Walgreens transaction.
“These private equity buyouts of companies facing financial hardship — whether they involve health care companies, retail, or other types of firms — frequently lead to worse outcomes for employees and consumers: private equity firms sell off assets and close locations, employees lose their jobs, and consumers lose access to essential goods and services,” Warren wrote.
In the letter dated April 29, the senator asked Sycamore Partners to respond to a series of questions, detailing their long-term plans for Walgreens’ retail pharmacy business. Questions asked by Warren include the number of store closures planned, how the private equity firm will decide which stores to close, and whether the new ownership plans to lease or sell property owned by Walgreens.
Further, she is asking for details on present and future plans to fire Walgreens employees during restructuring, including how the determination of layoffs will be made, as well as assurances from Sycamore Partners that it won’t saddle Walgreens with even more debt, while paying out dividends to investors despite the business being in the red.
“Will Sycamore Partners agree not to saddle the company with additional long-term debts in exchange for short-term payouts? For example, will Sycamore Partners agree not to engage in maneuvers such as selling Walgreens’ real estate and taking immediate payouts that then saddle the company with long-term lease payments?” Warren asked.
She requested the firm respond by May 13. A link to the full letter can be found here.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.