Walgreens-Rite Aid merger terminated

Deerfield, Ill.-based Walgreens Boots Alliance has decided to terminate its merger with Camp Hill, Pa.-based Rite Aid Corp., instead entering into a new agreement to buy 2,186 of Rite Aid’s 4,153 stores for $5.2 billion in cash. Walgreens will also pay a $325 million termination fee.

The deal is expected to close within the next six months pending FTC approval, at which point the drugstore chain will begin acquiring Rite Aid’s assets and converting locations to the Walgreens banner.

Plans for a merger between Walgreens and Rite Aid, the first and third largest drugstore chains, respectively, lagged for more than a year after the initial announcement due to scrutiny from the FTC over antitrust concerns. Walgreens attempted to allay these concerns by divesting 865 store locations to Memphis, Tenn.-based Fred’s Pharmacy, an agreement that has now been terminated.

The new deal with Rite Aid, which also includes three distribution centers, will increase Walgreens’ store footprint to more than 10,000 locations, pushing the chain well beyond Woonsocket, R.I.-headquartered CVS Health, which has approximately 8,000 stores.

“This new transaction extends our growth strategy and offers additional operational and financial benefits,” said Stefano Pessina, CEO of Walgreens Boots Alliance, in a statement. “It will allow us to expand and optimize our retail pharmacy network in key markets in the U.S., including the Northeast, and provide customers and patients with greater access to convenient, affordable care.”

To learn more, read this article on the website of EnsembleIQ’s Path to Purchase Institute, a sister division to Store Brands.