Walgreens Boots Alliance said the Sycamore deal will support turnaround plans announced last year.

Walgreens Boots Alliance "will be better positioned to become the first choice for pharmacy, retail and health services,' the company said.

Walgreens Boots Alliance: Walgreens Boots Alliance descends from Walgreen Drug Co., a pharmacy chain that started in Chicago in 1901 and says that it invented the malted milkshake in 1922.

It bought a 45% stake in Boots, a pharmacy chain that started in Goose Gate, Nottingham, in the United Kingdom in 1849.

Walgreens acquired the VillageMD retail clinic business in 2021 for $5.2 billion. VillageMD, in turn, acquired Summit Health and Summit Health's unit CityMD in 2023 for $8.9 billion.

VillageMD owes Walgreens Boots Alliance $3.4 billion, and the debt pays the equivalent of an annual interest rate of 19%, according to Walgreens Boots Alliance.

The company now has about 12,500 locations and about 311,000 employees in the United States, Europe and Latin America.

The company said in August that it would close about 160 of its 680 VillageMD clinics, and it said in October that it would close about 1,200 of its 8,500 U.S. drug stores.

Related: Walgreens to close 1,200 drugstores, in 'turnaround' after $3B loss

Walgreens announced the drug store closings shortly after its top competitor, CVS Health, said it would close 850 of its 9,100 drug stores.

Sycamore Partners: Sycamore Partners is a New York-based firm with about $10 billion in capital.

It has invested in companies such as Aeropostale, Lane Bryant, Playa Bowls, Staples, Talbots and The Limited.

The deal: Walgreens Boots Alliance and Sycamore note that Walgreens Boots Alliance shares were selling for just $8.85 each in December, before news of their deal talks leaked.

About 80% of the deal price would come in the form of an immediate cash payment, and about 20% would be tied to the success of efforts to sell the VillageMD business.

Walgreen Boots Alliance will seek a better offer during a 35-day "go shop" period.

The Walgreens Boots Alliance board has already approved the deal, and Sycamore said it already has received fully committed financing for the transaction.

The companies still need to get approvals from regulators and from Walgreens Boots Alliance shareholders.

The companies hope to get the approvals they need to complete the deal by the end of the year.

After completing the deal, Walgreens Boots Alliance would continue to operate using the same brands, and it would keep its headquarters in the Chicago area, the company said.

The Walgreens Boots Alliance fiscal year starts Sept. 1, and its second fiscal quarter ends March 31. The company may give more details about the Sycamore deal April 8, when it posts its second-quarter earnings.

The thinking: Tim Wentworth, the chief executive officer of Walgreens Boots Alliance, said in the Sycamore deal announcement that the company has been making progress on the previously announced turnaround efforts.

But "meaningful value creation will take time, focus and change that is better managed as a private company," Wentworth said. "Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds."

He said he expects Walgreens Boots Alliance to continue to provide pharmacy, retail and health care services.

Stefan Kaluzny, managing director of Sycamore Partners, said his firm is aware of Walgreens' 125-year history. "We are committed to stewarding the company's iconic brands,” he said. "This transaction reflects our confidence in WBA's pharmacy-led model."