The private equity giant pitches a $70 billion buyout proposal for the drugstore chain.

Is KKR buying Walgreens Boots Alliance?

Based on a new buyout proposal, the answer could be “yes.” The private equity giant has put together a $70 billion proposal that would take the pharmacy benefits firm private. The math shows what could be the largest private equity deal in market history.

Is KKR buying Walgreens Boots Alliance?

It’s been three years since KKR offloaded its remaining shares of Walgreens from another buyout. The firm would need to work with other investors to secure the necessary capital. A $70 billion buyout of Walgreens would easily top the $45 billion buyout deal of TXU in 2007.

KKR purchased Alliance Boots in 2007 alongside a group of investors that included Stefano Pessina, then the company’s executive chairman.

In 2012, Walgreens purchased a 45% stake in Alliance Boots, then Europe’s largest pharmaceutical wholesaler. The $6.7 billion deal included an option to purchase the remaining stake. Walgreens executed that deal in 2014 for $15.3 billion. Pessina would go on to become the CEO of the larger company and has about a 16% stake.

The Financial Times suggests that senior management would take part in a deal to bring Walgreens private. Several reasons exist for Walgreens to accept a buyout deal.

Shares have fallen 20% over the last year. In addition, the broader healthcare retail and pharmacy benefits sectors remain under pressure. A deal would give it the chance to get out of the public eye as it shifts its strategy and focuses on the future. 

Blackstone Group Didn’t Expect a Deal

So: Is KKR buying Walgreens Boots Alliance?

A deal is possible. But Blackstone chief Stephen Schwarzman threw cold water on the possibility this week. Schwarzman said that a deal like this would be a stretch given current market conditions.

It might be possible. It’s a huge stretch doing things over $50 billion,” Schwarzman said at a conference in New York. “You need at least $20 billion of equity. Could you find that in today’s world? Maybe. Thirty billion of debt you could probably get. It’s a little tougher on the equity.”