The Long Saga Of Walgreens-Rite Aid Finds Closure With Amended Deal

After a long, unsuccessful struggle to merge, Walgreens Boots Alliance Inc WBA announced Tuesday that it secured regulatory clearance to purchase 1,932 stores, three distribution centers and associated inventory from Rite Aid Corporation RAD.

The new $4.375 billion transaction, amended from an earlier agreement of $5.175 billion for 2,186 stores, is expected to generate annual synergies over $300 million within four years.

“Combining Walgreens retail pharmacy network with a strong portfolio of Rite Aid locations is expected to help us achieve enhanced, sustainable growth while enabling us to broaden our reach and provide greater access to convenient, affordable care in more local neighborhoods across the United States,” Stefano Pessina, Walgreens executive vice chairman and CEO, said in a press release.

The terms include Walgreens’ seizure of real estate leases and the option for Rite Aid to join Walgreens Boots Alliance Development GmbH.

The boards of both parties have approved the deal, and Walgreens will begin purchasing assets in October. Individual stores, located primarily in the South and Northeast, will phase slowly into the Walgreens brand, while the distribution centers in Connecticut, Pennsylvania and South Carolina will transition no sooner than fall 2018.

Based on this timeline, Walgreens does not anticipate meaningful impact on earnings per share in the 2018 fiscal year.

At time of publication, shares of Rite Aid were down 5.49 percent at $2.58. Shares of Walgreens were down 1.71 percent at $81.19.

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Posted In: Stefano PessinaWalgreens Boots Alliance Development GmbHNewsContractsAsset SalesM&AMovers

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