Walgreens to Pay $165M for Pharmacy Files From Fred's
Walgreens Boots Alliance said it will buy Fred's patient prescription files and related pharmacy inventory for $165 million. The companies said Monday that the files will come from 185 Fred’s stores located across 10 Southeastern states and continue the Memphis-based discount retailer's effort to engineer its latest attempt at a financial turnaround. The exit from the pharmacy business by Fred’s comes after the retailer was unable to escalate its shift to healthcare when a deal to buy hundreds of Rite Aid stores ended abruptly last year. An attempt by Walgreens to buy Rite Aid and satisfy the Federal Trade Commission by selling 865 Rite Aid stores to Fred’s was unable to gain regulatory approval. Walgreens instead bought just 2,186 of the more than 4,500 Rite Aids, turning Rite Aid into a multiregional drugstore chain and preventing Fred’s from buying hundreds of drugstores all at once. Fred's has already sold its specialty pharmacy business to CVS Health for $40 million.
Total Retail's Take: Walgreens is looking to increase patient access to its pharmacies in the Southeast, and this deal with Fred's helps to accomplish that. The pharmacy category has been in flux recently with consolidation, failed mergers (Rite Aid and Albertsons), and Amazon.com's entrance into the marketplace, causing traditional players like Walgreens and CVS to seek ways to bolster their businesses, primarily through acquisition. Both CVS and Walgreens have turned to cash-starved Fred's as a trading partner. Look for continued deals in the competitive pharmacy category as leaders CVS and Walgreens won't cede marketshare to Amazon without a fight.