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Walgreens gets regulatory approval to buy 1,932 Rite Aid stores for $4.375bn

RBR Staff Writer Published 20 September 2017

Walgreens Boots Alliance, a drug store chain has secured regulatory clearance to buy 1,932 stores from Rite Aid for $4.375bn.

In June 2017, Walgreens Boots Alliance had entered into an agreement to buy all 2,186 stores and related assets for $5.175bn in cash and other considerations.

The deal was opposed by US Federal Trade Commission forcing the company to amend the original deal and agree to buy 254 fewer stores.  

The boards of directors of both companies have agreed on the amended terms of the transaction, which is subject to other customary closing conditions. The purchases of stores are expected to be completed in 2018.

After the acquisition, the stores will be converted to the Walgreens brand in a phased manner.

The stores are located primarily in the northeast and southern US. The three distribution centers are located in Dayville in Connecticut, Philadelphia, and Spartanburg in South Carolina.

However, the transition of the distribution centers to Walgreens will begin after at least 12 months.

According to the terms of the agreement, Walgreens Boots Alliance will also assume limited store-related liabilities, in addition to the related real estate leases.

Walgreens Boots Alliance expects to realize annual synergies of more than $300m within four years of the initial closing of the new transaction, primarily from procurement, cost savings and other operational matters.

Walgreens Boots Alliance executive vice Chairman and CEO Stefano Pessina said: "Combining Walgreens retail pharmacy network with a strong portfolio of Rite Aid locations is expected to help us achieve enhanced, sustainable growth while enabling us to broaden our reach and provide greater access to convenient, affordable care in more local neighborhoods across the United States.”

Walgreens’ portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, and global health and beauty product brands such as No7, Botanics, Liz Earle and Soap & Glory.

Image: Walgreens Drugstore. Photo: courtesy of Walgreens Boots Alliance, Inc.