Walgreens Boots Alliance may be getting closer to divesting hundreds of stores to win U.S. regulatory approval of its Rite Aid acquisition as reports of U.S. pharmacy consolidation escalate. A Walgreens partner emerged when Fred’s Pharmacy disclosed its management was discussing a “pending transaction.” Management at Fred's cautioned on its third quarter earnings call that “no assurance” could be made that a deal would happen, but executives said they are looking to expand U.S. pharmacy operations. It’s unclear whether Fred’s would partner to buy Rite Aid or Walgreens pharmacy, but Fred’s CEO Mike Bloom said “acquisition and partnership activity” was in the company’s future.
Total Retail's Take: The longer it takes for the Walgreens-Rite Aid merger to win U.S. regulatory approval, with Walgreens forced to divest of at least 500 stores to make that happen, the less confident I am that the deal will be approved. Like the failed Staples-Office Depot merger earlier this year, it seems the FTC is intent on ensuring that all antitrust concerns are addressed before signing off on the deal. If approved, even with a divestiture of 1,000 stores, a combined Walgreens and Rite Aid would boast the most U.S. pharmacy stores, putting it ahead of chief rival CVS Health.