Shares of Walgreens Boots Alliance (WBA 14.02%) were moving higher today after CNBC’s David Faber said that a possible deal to take over the ailing pharmacy and urgent-care chain was still alive.
Trading in the stock was also halted Tuesday morning, which can indicate a major announcement, though no news came out. As of 10:48 a.m. ET, the stock was up 10.2%.
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Is a deal in the works?
Walgreens has been struggling for years. It overpaid in its acquisition of VillageMD urgent care centers, and it has faced other headwinds related to opioid lawsuits and a slowdown in COVID vaccine sales.
After that collapse in the stock, its market cap has fallen to just $9.3 billion, potentially making it an attractive acquisition target because its assets, which include roughly 10,000 stores in the U.S., could be worth much more than that.
Back in December, several media outlets reported that private equity firm Sycamore was interested in making a play for Walgreens, though it’s unclear if a deal would go through.
Faber’s comment today had investors feeling optimistic about a potential deal.
Good news for Walgreens stockholders
At this point, a deal seems like the best outcome for Walgreens. Though there’s been some evidence of a turnaround as it returned to growth in sales and adjusted earnings per share, it still faces a number of challenges.
Management cut its dividend by roughly 50% a year ago, but it could face pressure again given the volatile nature of the business.
It’s unclear what Sycamore’s buyout price would be, but expect Walgreens stock to keep moving on the buyout rumors.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
