Walgreens-Rite Aid Deal Delayed, Price Lowered
Walgreens Boots Alliance and Rite Aid are revising their proposed merger, cutting it back more than $2 billion from the original purchase price and pushing the closing date back six months while they await regulatory approval. The tentative deal, which was supposed to close Friday, is now scheduled to close July 31 to give the companies more time to get the thumbs-up from the Federal Trade Commission (FTC). The deal, previously valued at $17.2 billion, including debt, is now valued at between $14 billion and $14.6 billion.
Total Retail's Take: The Walgreens-Rite Aid merger is a cautionary tale for competitive businesses that want to join forces and become one. It's clear the FTC is scrutinizing the Walgreens-Rite Aid deal very closely. Walgreens announced in December that it would sell 865 Rite Aid stores to Fred's Pharmacy for $950 million to address FTC concerns about the deal, but apparently it didn't go far enough. Lowering the purchase price does show that Walgreens is committed to completing the deal with Rite Aid. Drugstores are under financial pressure as government insurance programs such as Medicare and Medicaid cut drug reimbursements, and Walgreens likely is looking to grow to help offset that pressure.
Melissa Campanelli is Editor-in-Chief of Total Retail. She is an industry veteran, having covered all aspects of retail, tech, digital, e-commerce, and marketing over the past 20 years. Melissa is also the co-founder of the Women in Retail Leadership Circle.