Walgreens Gets Regulatory Approval to Buy Rite Aid Stores
In its fourth attempt, Walgreens Boots Alliance clinched regulatory approval for a deal to buy Rite Aid Corp. stores after a last-minute reduction of the number of stores and price. The Deerfield, Ill.-based drugstore chain said Tuesday it secured clearance for a revised deal under which it will buy 1,932 Rite Aid stores for $4.38 billion. That's about 250 fewer stores than under a previous proposal, which totaled $5.18 billion. The modified agreement, while reduced, will still enable Walgreens to dramatically expand its footprint and become a more powerful competitor to CVS Health Corp. With the addition of the Rite Aid stores, Walgreens will have about 10,000 locations in the U.S.
Total Retail's Take: Finally some closure on this drawn out deal, which more than once looked like it would never happen. Walgreens initially proposed to acquire Rite Aid in October 2015 for $9.4 billion. However, after that deal failed to win regulatory approval over concerns that the merged companies would hurt competition, the two sides have been negotiating an agreement that would satisfy the Federal Trade Commission. The primary focus of those negotiations has been a reduction in the number of Rite Aid stores that Walgreens would take over. The winning deal has Walgreens taking over 12 percent less stores than its original offer — albeit for a lower price — yet still positions the drug store chain to take marketshare from its top competitor, CVS.