Walgreens-Controlled VillageMD In Talks With Summit Health For Possible Takeover

  • Walgreens Boots Alliance Inc WBA VillageMD is weighing a merger with Warburg Pincus-backed Summit Health.
  • The deal of VillageMD acquiring Summit would value the combined entity at between $5 billion to $10 billion.
  • An agreement could be reached in the coming weeks, though talks could still fall apart, Bloomberg reported.
  • The talks come as Walgreens rivals, including CVS Health Corp CVS and Amazon.com Inc AMZN, push deeper into primary health care through significant acquisitions, including $8 billion for Signify Health Inc SGFY and around $4 billion for 1life Healthcare Inc, respectively.
  • In September, CVS Health showed interest in buying Cano Health Inc CANO but later walked out of the deal.
  • Walgreens increased its stake last year in VillageMD to 63% from 30% by investing $5.2 billion in the company. 
  • Walgreens first invested in closely held VillageMD in 2020, intending to build as many as 700 primary care clinics inside its pharmacies. It said last year that it would increase to 1,000 by 2027. 
  • Summit Health, formed in 2019 by the merger of Summit Medical Group and CityMD, has more than 370 locations in New Jersey, New York, Connecticut, Pennsylvania, and Oregon.
  • Warburg Pincus, a New York-based private equity firm, acquired CityMD in 2017 and took a majority stake in Summit after the 2019 merger.
  • Price Action: WBA shares closed at $36.58 on Friday.
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