Banks are becoming wary of underwriting large chunks of the financing due to tough market conditions.
Boots was initially valued at as much as £8 billion, according to banking sources.
Global economic uncertainty and rising inflation have triggered a spike in interest rates as central banks have rushed to take action in the most widespread tightening of monetary policy for more than two decades, making deal financing costlier and harder to access.
Walgreens had put its Boots business up for sale after announcing a strategic review in January as the second-largest US pharmacy chain renewed its focus on domestic healthcare.
The company said the decision to retain Boots and No7 Beauty Company is also underpinned by their ongoing strong performance.
“It is an exciting time for these businesses, which are uniquely positioned to continue to capture future opportunities presented by the growing healthcare and beauty market,” Walgreens chief executive Rosalind Brewer said.
The 173-year-old Boots business includes 2,200 stores in the UK, including pharmacies, health and beauty stores. It also has about 90 stores in Ireland.