Schwarzman Says Walgreens Boots Leveraged Buyout a ‘Stretch’

(Bloomberg) -- A deal to take Walgreens Boots Alliance Inc. private would be a “stretch” at a time when investors have become more discriminating, said Stephen Schwarzman, head of one of the world's biggest buyout firms.

“It might be possible. It's a huge stretch doing things over $50 billion,” the Blackstone Group Inc.'s chief executive officer said Wednesday at a Reuters Newsmaker event in New York. His firm has led some of the largest leveraged buyouts ever, including the Hilton hotel chain and Equity Office Properties Trust.

Walgreens has been reviewing a potential deal to take the company private in what could become the largest LBO in history, Bloomberg News reported Tuesday. Deerfield, Illinois-based Walgreens has a market value of about $53 billion and $16.8 billion of debt.

“You need at least $20 billion of equity. Could you find that in today's world? Maybe,” Schwarzman said. “Thirty billion of debt you could probably get. It's a little tougher on the equity.”

The markets for leveraged debt have shown signs of weakness in recent months as the trade war with China stokes fears of a recession.

But these mega deals are “straining the system,” Schwarzman said. “It depends what it is,” he said, adding that a company could still be “terrific” with a guaranteed profit even if it's out of favor.

To contact the reporter on this story: Katherine Doherty in New York at kdoherty23@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Nicole Bullock, Shannon D. Harrington

©2019 Bloomberg L.P.