Fairness opinions › Pharmacy / Infusion › 2025

Walgreens acquired by Sycamore Partners: fairness opinion by Centerview Partners and Morgan Stanley

Announced March 6, 2025 · Going-private · Cash plus CVR · DEFM14A filed June 6, 2025

Pharmacy / Infusion Retail

Enterprise value

$24B

EV / LTM EBITDA

52.4x

EBITDA $452M · 0% margin

EV / LTM revenue

0.16x

revenue $148B

DCF discount rate

9.3%–10.8%

Exit multiple

Deal terms

ConsiderationCash plus CVR

Price per share$11.45

Premium—

Premium basis—

StructureGoing-private

Termination fee$316M

Reverse termination fee$560M

Go-shop35 days · $158M reduced fee

Outside dateMarch 6, 2026

FilingDEFM14A · EDGAR index

CVR: One non-transferable Divested Asset Proceed (DAP) Right per share, entitling holder to up to $3.00 in cash contingent on future monetization of the VillageMD/VPMC Group (VMD) assets

$11.45 in cash per share plus one DAP Right (up to $3.00). Centerview valued the DAP Right at $0.90-$1.40 (Implied Consideration Value $12.35-$12.85); Morgan Stanley valued it at $1.19-$1.91 (Implied Consideration Value $12.64-$13.36).

Implied value per share by method vs. $11.45 offer

Selected companies — EV / NTM Adjusted EBITDA (Centerview Partners) $4.60 – $12.70

Precedent transactions — TEV / LTM Adjusted EBITDA (Centerview Partners) $6.90 – $15.20

Discounted cash flow (Centerview Partners) $10.80 – $19.10

DAP Right Valuation (risk-adjusted NPV) (Centerview Partners) $0.90 – $1.40

Analyst Price Target Analysis (Centerview Partners) $7.00 – $15.00

Precedent Premiums Paid Analysis (Centerview Partners) $10.60 – $12.80

Illustrative Discounted Future Share Price Analysis (Centerview Partners) $8.10 – $10.40

Illustrative Sum-of-the-Parts Analysis (Centerview Partners) $8.20 – $13.90

Selected companies — P / CY2025E Adjusted EPS (implied, after one-year average discount) (Morgan Stanley) $7.95 – $12.25

Precedent transactions — AV / LTM Adjusted EBITDA (LTM ended 11/30/2024 Adj. EBITDA of $3,662 million) (Morgan Stanley) $4.60 – $16.95

Discounted cash flow (Morgan Stanley) $11.60 – $19.90

Valuation of DAP Rights (Morgan Stanley) $1.19 – $1.91

Discounted Equity Value Analysis (Morgan Stanley) $8.05 – $10.75

Sum of the Parts Comparable Companies Analysis (Morgan Stanley) $10.85 – $16.90

Illustrative Precedent Transaction Premiums (Morgan Stanley) $11.85 – $14.65

Historical Trading Prices (52-week) (Morgan Stanley) $8.08 – $22.05

Equity Research Analysts' Price Targets (Morgan Stanley) $7.00 – $15.00

Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.

Opinion of Centerview Partners to the target board

Delivered March 6, 2025 · Fee $60.0M ($45.0M contingent on closing), $15.0M on delivery of the opinion

Discounted cash flow assumptions

Discount rate9.3%–10.8%

BasisCompany's weighted average cost of capital determined using the capital asset pricing model

Terminal valueExit multiple

Perpetuity growth—

Exit multiple5.0x–7.0x Adjusted EBITDA for twelve months ending August 31, 2029

Projection periodFY2025E-FY2029E (cash flows from 8/31/2025 to 8/31/2029)

Projections usedFebruary Projections (management Forecasts, including Extrapolations)

Implied value per share$10.80–$19.10

Discounted to present value as of November 30, 2024; excluded dark rent payments and potential opioid liabilities from EV, which were separately discounted at 7% (cost of debt) and subtracted.

Selected public companies (13)

Albertsons Companies, Inc. · CVS Health Corporation · Dollar General Corporation · Dollar Tree, Inc. · Koninklijke Ahold Delhaize N.V. · Target Corporation · The Kroger Co. · B&M European Value Retail SA · Frasers Group plc · J Sainsbury plc · Kingfisher plc · Marks and Spencer Group p.l.c. · Tesco plc

Multiple	Peer low	Peer median	Peer high	Range applied	Implied per share
EV / NTM Adjusted EBITDA	3.4x	—	9.2x	5.0x–7.0x	$4.60–$12.70

Selected precedent transactions (11)

Date	Target	Acquirer	Multiple
2022-05-11	The Fresh Market, Inc.	Cencosud S.A.	8.0x TEV / LTM EBITDA
2021-05-14	Smart & Final Stores, Inc.	Bodega Latina Corp.	3.7x TEV / LTM EBITDA
2019-04-16	Smart & Final Stores, Inc.	Apollo Global Management, LLC	6.5x TEV / LTM EBITDA
2018-07-26	Supervalu Inc.	United Natural Foods, Inc.	7.0x TEV / LTM EBITDA
2017-06-16	Whole Foods Market, Inc.	Amazon.com, Inc.	10.6x TEV / LTM EBITDA
2016-10-17	Save-A-Lot	Onex	7.0x TEV / LTM EBITDA
2016-03-14	The Fresh Market, Inc.	Apollo Global Management, LLC	7.1x TEV / LTM EBITDA
2015-11-11	Roundy's, Inc.	The Kroger Co.	6.9x TEV / LTM EBITDA
2024-12-23	Nordstrom, Inc.	Nordstrom Family, El Puerto de Liverpool S.A.B. de C.V.	5.7x TEV / LTM EBITDA
2017-06-28	Staples, Inc.	Sycamore Partners	5.0x TEV / LTM EBITDA
2015-08-15	Belk, Inc.	Sycamore Partners	6.9x TEV / LTM EBITDA

Multiple	Low	Median	High	Range applied	Implied per share
TEV / LTM Adjusted EBITDA	3.7x	6.9x	10.6x	5.5x–7.5x	$6.90–$15.20

Other analyses

Analysis	Summary	Implied per share
DAP Right Valuation (risk-adjusted NPV)	Illustrative risk adjusted NPV as of March 31, 2025 for one DAP Right of $0.93-$1.39 ($0.90-$1.40 rounded). Based on FY2027 projected EV of $2.225-$3.375bn for VMD assets (trading comps $2.400-$3.300bn; precedent transactions $2.225-$3.025bn; DCF $2.475-$3.375bn), plus $70m cash build, reduced 30% for value not allocated to shareholders ($1.606-$2.411bn), discounted at 11.5%, giving $1.33-$1.99 before a (30%) risk adjustment.	$0.90–$1.40
Analyst Price Target Analysis	Reviewed 14 Wall Street research analyst price targets for Company Common Stock.	$7.00–$15.00
Precedent Premiums Paid Analysis	Take-private transactions since 2019 with transaction value greater than $5 billion; applied premium range of 20%-45% to the December 9, 2024 closing price of $8.85.	$10.60–$12.80
Illustrative Discounted Future Share Price Analysis	Applied NTM P/E multiples of 6.0x-7.50x to estimated 2026-2028 Adjusted EPS, discounted at a cost of equity of 11.0%.	$8.10–$10.40
Illustrative Sum-of-the-Parts Analysis	Applied illustrative multiple ranges to U.S. Retail Pharmacy, Boots/International, Shields, USHC ex. Shields and corporate expense businesses from the Projections.	$8.20–$13.90

Aggregate fee of approximately $60 million; $15 million payable upon rendering of opinion; up to $10 million discretionary incentive fee contingent on consummation; remaining $35 million contingent on consummation. Centerview received $1,500,000 for other services to the Company in the prior two years.

Opinion of Morgan Stanley to the target board

Delivered March 6, 2025 · Fee $10.0M ($5.0M contingent on closing), $5.0M on delivery of the opinion

Discounted cash flow assumptions

Discount rate9.0%–10.3%

BasisCompany's estimated weighted average cost of capital

Terminal valueExit multiple

Perpetuity growth-1.2%–2.6%

Exit multiple5.0x–7.0x LTM Adjusted EBITDA

Projection period2H FY2025E-FY2029E

Projections usedFebruary Projections (management), including VMD Forecasts / potential sale of VPMC Group assets

Implied value per share$11.60–$19.90

Discounted to present value as of February 28, 2025 using mid-year convention; exit multiple range implied a perpetuity growth rate of -1.2% to 2.6%.

Selected public companies (5)

CVS · Other US Retail (peer group) · International (peer group) · Distributors (peer group) · S&P 500

Multiple	Peer low	Peer median	Peer high	Range applied	Implied per share
P / CY2025E Adjusted EPS (current peer multiples)	11.0x	—	21.9x	—	—
P / CY2025E Adjusted EPS (implied, after one-year average discount)	4.8x	—	7.4x	4.8x–7.4x	$7.95–$12.25

Selected precedent transactions (15)

Date	Target	Acquirer	Multiple
2015-10	Rite Aid	Walgreens Boots Alliance	13.0x AV / LTM EBITDA
2012-06	Alliance Boots	Walgreens Boots Alliance	12.1x AV / LTM EBITDA
2010-02	Duane Reade	Walgreens Boots Alliance	11.4x AV / LTM EBITDA
2015-11	Petco	CVC/CPP Investments	9.0x AV / LTM EBITDA
2022-05	The Fresh Market	Cencosud	8.0x AV / LTM EBITDA
2013-07	Harris Teeter	Kroger	7.4x AV / LTM EBITDA
2016-03	The Fresh Market	Apollo	7.1x AV / LTM EBITDA
2016-10	Save-a-Lot	Onex	7.0x AV / LTM EBITDA
2015-08	Belk	Sycamore	6.9x AV / LTM EBITDA
2015-11	Roundy's	Kroger	6.9x AV / LTM EBITDA
2019-04	Smart&Final	Apollo	6.5x AV / LTM EBITDA
2024-12	Nordstrom	Nordstrom Family, Liverpool	5.7x AV / LTM EBITDA
2014-03	Safeway	Albertsons	5.5x AV / LTM EBITDA
2022-10	Albertsons	Kroger	5.4x AV / LTM EBITDA
2017-06	Staples	Sycamore	5.0x AV / LTM EBITDA

Multiple	Low	Median	High	Range applied	Implied per share
AV / LTM Adjusted EBITDA (LTM ended 11/30/2024 Adj. EBITDA of $3,662 million)	5.0x	—	13.0x	5.0x–8.0x	$4.60–$16.95

Other analyses

Analysis	Summary	Implied per share
Valuation of DAP Rights	Assumed VPMC Group monetization on 12/31/2027 at 13.0x LTM EBITDA (sensitized 10.0x-16.0x), less 1.5% transaction expenses, plus CY2025-CY2027 cumulative free cash flow, giving net proceeds of $2.580bn; reduced 30% for value not allocated to shareholders, yielding nominal $2.03/share, discounted at 9.9% to $1.55 (range $1.19-$1.91).	$1.19–$1.91
Discounted Equity Value Analysis	Applied NTM P/E multiples of 6.0x-8.0x to NTM Adjusted EPS as of 8/31/2027, discounted to 2/28/2025 at a 12.3% cost of equity (6% market risk premium, 4.5% risk-free rate, 1.30 predicted beta).	$8.05–$10.75
Sum of the Parts Comparable Companies Analysis	For reference only; AV / 2025E Adj. EBITDA applied to U.S. Retail Pharmacy, International and U.S. Healthcare segments, adjusted for debt, dark rent, working capital normalization, opioid liabilities, settlements, UK pension and cash/equity stakes.	$10.85–$16.90
Illustrative Precedent Transaction Premiums	U.S. all-cash transactions since 2000 with equity value over $1 billion; median one-day premium to unaffected price of 43%; applied 22%-51% (25th-75th percentile) to the February 14, 2025 closing price of $9.70.	$11.85–$14.65
Historical Trading Prices (52-week)	Low and high closing prices for Company Common Stock over the 52-week period ended March 3, 2025.	$8.08–$22.05
Equity Research Analysts' Price Targets	Price targets published by thirteen equity research analysts as of March 3, 2025; reference only.	$7.00–$15.00

One-time fee of $10 million; 50% ($5 million) payable on delivery of the opinion, remaining 50% ($5 million) on consummation. Morgan Stanley was retained only to provide a financial opinion and was not involved in structuring, planning or negotiating the merger. In the prior two years Morgan Stanley received $2-5 million of financing fees from the Company and $5-15 million from Sycamore and affiliates.

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Management projections

Projection year	Year 1	Year 2	Year 3	Year 4	Year 5	CAGR
Revenue	$155B	$150B	$156B	$161B	$167B	1.9%
Revenue growth	4.7%	-3.0%	4.0%	3.4%	3.3%
EBITDA	$3.7B	$3.7B	$4.1B	$4.4B	$4.7B	6.1%
EBITDA growth	720.1%	1.0%	10.4%	7.4%	5.7%
EBITDA margin	2%	3%	3%	3%	3%
Implied EV / EBITDA	6.4x	6.3x	5.7x	5.3x	5.0x

Year-1 growth is against LTM at announcement ($148B revenue, $452M EBITDA); later years are year over year.

Management prepared a three-year plan (Management 3YP) with Centerview-assisted extrapolations for FY2028-FY2029; the final "February Projections" (FY2025E-FY2029E) were approved by the Board and given to Centerview and Morgan Stanley. February Projections show revenue of $154,584m in FY2025E declining to $149,874m in FY2026E then rising to $166,548m in FY2029E, Adjusted EBITDA of $3,710m in FY2025E growing to $4,696m in FY2029E, Adjusted Operating Income of $2,060m to $2,829m, and unlevered free cash flow of $1,989m in FY2025E, $992m in FY2026E and $1,607m in FY2029E. Separate VMD Forecasts for the VPMC Group (CY2025E-CY2030E) show revenue of $5,569m falling to $5,036m in CY2026E then growing to $5,955m in CY2030E, with Adjusted EBITDA rising from $31m to $310m. Earlier October and December Management Projections were also disclosed.

Process notes

Going-private transaction with two fairness opinions delivered to the Board on March 6, 2025: Centerview (lead financial advisor, $60m fee) and Morgan Stanley (retained solely to deliver an opinion, $10m fee, not involved in negotiations). A Transaction Committee of the Board oversaw the process. Consideration includes a non-transferable DAP Right (up to $3.00) tied to monetization of the VillageMD/VPMC Group assets, valued at $0.90-$1.40 by Centerview and $1.19-$1.91 by Morgan Stanley. Executive Chairman Stefano Pessina (SP Investors) is rolling over equity, so his shares and Excluded/Dissenting Shares were carved out of the fairness opinions. The Merger Agreement contained a 35-day go-shop with a reduced $158m break fee (also available for Exempted Persons through the 55th day), $316m fee otherwise, $560m reverse termination fee (guaranteed pro rata by Equity Commitment Parties, plus $30m expense cap), and outside date of March 6, 2026 (extendable to June 6, 2026). Deal structure involves a pre-closing reorganization/Initial Closing followed by the Merger Closing; the transaction leaked via a December 10, 2024 Wall Street Journal article.

Other Pharmacy / Infusion fairness opinions

Diplomat Pharmacy / UnitedHealth Group 2019 · 12.1x EV/EBITDA
PharMerica / KKR 2017 · 9.6x EV/EBITDA
CVS Health / Aetna 2017 · 7.2x EV/EBITDA
Omnicare / CVS Health 2015 · 15.8x EV/EBITDA

All Pharmacy / Infusion opinions → · Centerview Partners opinions · Morgan Stanley opinions