Walgreens Calls Off Deal to Buy Rite Aid
By MICHAEL. J. DE LA MERCED
The New York Times
JUNE 29, 2017
A Walgreens store in New York. Under the terms of the deal, Rite Aid will receive a $325 million termination fee. Credit Reuters
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Walgreens Boots Alliance and Rite Aid said on Thursday that they had called off their planned merger, ending nearly two years of negotiations between the top drugstores.
Instead, Rite Aid will sell 2,186 stores and three distribution centers to Walgreens for $5.175 billion.
The new agreement will annul not only the planned sale of Rite Aid to Walgreens but also the sale of some Rite Aid stores to Fred’s Inc., a related transaction aimed at helping the two companies win antitrust approval.
“We believe this new transaction addresses competitive concerns previously raised with respect to the prior transaction and will streamline and simplify the transition for customers, team members and other stakeholders,” the Walgreens chief executive, Stefano Pessina, said.
Thursday’s announcement signals an end to the proposed union, after the two companies reportedly received pushback from antitrust regulators worried about reduced competition in the drugstore industry.
The companies agreed to merge in October 2015, and analysts quickly expected the deal to meet resistance — the combined company would have had more than 8,000 stores across the United States, Puerto Rico and the Virgin Islands. That would have been more than the number of outlets at CVS Health, the biggest drugstore chain by market capitalization at the time.
In January this year, Walgreens and Rite Aid said they would reduce the price of the proposed sale.
Under the terms of the deal agreement, Rite Aid will receive a $325 million termination fee after Thursday’s news.
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