Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Dow Jones News: Walgreens Draws KKR Interest; Boeing Targets January for 737 MAX Return

By Timothy Green - Nov 11, 2019 at 2:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Walgreens has a private equity firm interested in a deal, and Boeing expects its grounded planes to be back in the air soon.

The Dow Jones Industrial Average ( ^DJI ) managed to turn positive by Monday afternoon, up 0.08% at 1:50 p.m. EST. Big gains for Walgreens Boots Alliance ( WBA 3.80% ) and Boeing ( BA 3.72% ) drove the Dow higher. Walgreens took a step closer to a go-private deal, and Boeing laid out an optimistic timeline for its 737 MAX.

The Walgreens buyout takes a step forward

Last week, reports emerged that drugstore chain Walgreens was exploring going private. Optimism was dampened the next day by analysts putting low odds on a deal of such magnitude. Including debt, Walgreens has an enterprise value of roughly $70 billion.

A deal became more likely on Monday after Bloomberg reported that private equity firm KKR & Co. has made a formal approach. KKR has been working on a proposal to take Walgreens private, according to Bloomberg's sources, even as other potential suitors have walked away. Shares of Walgreens were up 6.1% on the news.

A Walgreens store.

Image source: Walgreens Boots Alliance.

A deal to take Walgreens private would be the largest leveraged buyout in history, and it would saddle Walgreens with even more debt. The company has been working to cut costs to shore up the bottom line, which has come under pressure in recent quarters. In Walgreens' fiscal fourth quarter, adjusted earnings per share were down 3.7%, despite billions of dollars spent reducing the share count via share buybacks. Adjusted operating income was down 12% from the prior-year period.

While Walgreens' overall U.S. retail pharmacy business grew sales in the fourth quarter, the retail portion of the business suffered a 3.9% sales decline. Walgreens is facing competition from Amazon, which recently began making many inexpensive personal products and household items eligible for free next-day shipping under its Prime membership program.

A deal is still far from a certainty, but the market became a little more optimistic to start the week.

Boeing predicts 737 MAX deliveries soon

Shares of Boeing shot up 4.2% after the airplane manufacturer and defense company said it expects its grounded 737 MAX planes to be back in the air in January. The company also said it's possible that it will resume deliveries of its 737 MAX planes in December.

The return of the 737 MAX won't happen until regulators give the go-ahead. Boeing is currently working on its updated training requirements, and the U.S. Federal Aviation Administration must complete an audit of the 737 MAX's software documentation before a certification test flight can be scheduled. Reuters reported last week that Boeing was forced to revise the software documentation due to multiple issues.

While Boeing is optimistic on the return of the 737 MAX, both American Airlines and Southwest Airlines have cancelled 737 MAX flights until early March. Southwest expects a return to service on March 6, while American set a date of March 5.

A resumption of 737 MAX deliveries can't come soon enough for Boeing. In the third quarter, Boeing delivered just 62 commercial airplanes, down 67% year over year. Total revenue was down 21%, while adjusted earnings per share plunged 59%.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Boeing Company Stock Quote
The Boeing Company
$205.88 (3.72%) $7.39
Walgreens Boots Alliance, Inc. Stock Quote
Walgreens Boots Alliance, Inc.
$48.30 (3.80%) $1.77
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.