Walgreens Boots CEO: No Plan B for Rite Aid Merger--Update
January 05 2017 - 12:33PM
Dow Jones News
By Sharon Terlep and Anne Steele
Walgreens Boots Alliance Inc. has no backup plan should U.S.
antitrust regulators reject a $9.4 billion tie-up with Rite Aid
Corp. that has been held up amid scrutiny from the Federal Trade
Commission, the drugstore giant's chief executive said
Thursday.
"We don't want even to think the deal could not be approved
after so many months, after we have given so much information and
have had a good relationship with the people of the FTC," Walgreens
CEO Stefano Pessina said during a call with analysts.
To appease antitrust regulators, Walgreens and Rite Aid last
month agreed to sell 865 Rite Aid locations to Fred's Inc., a
regional chain. The Walgreens-Rite Aid merger, announced in October
2015, would combine two of the U.S.'s three largest retail pharmacy
chains, creating a combined company with more than 13,000 stores
including those being sold to Fred's.
On Thursday Mr. Pessina said the FTC is still requesting
information on the deal and the companies continue to work toward
closing the merger early this year.
He added that he is optimistic that the lengthy FTC review is a
sign regulators are interested in understanding and ultimately
approving the deal. "If we had a big surprise, we would have to sit
down and decide what to do, because there are many possible
reactions. I can assure you we will not have a hysterical
reaction," Mr. Pessina said.
The Deerville, Ill.-based company on Thursday raised the low end
of its yearly guidance as it expects a boost from a string of new
agreements with health-care companies.
Those include a partnership with Prime Therapeutics, a
pharmacy-benefits manager owned by Blue Cross and Blue Shield
health plans, which makes Walgreens a preferred pharmacy where
patients pay less to fill prescriptions. It also replaced CVS
Health Corp. as in-network pharmacy for Tricare, a health-care
program for military personnel and their families.
Meanwhile, Walgreens has been trying to win more pharmacy
customers, improve margins in its U.S. stores and cut costs.
In its largest division, the U.S. pharmacy business, Walgreens
posted a 1.1% increase in sales at existing stores for the quarter
ended Nov. 30. The company filled 3% more prescriptions versus a
year ago as it continues to get more volume from Medicare
patients.
Walgreens said retail sales at stores open at least a year fell
0.5% during the quarter, due to lower sales of consumables and
general merchandise that were partially offset by upticks in sales
in the health, wellness and beauty categories.
In all, the company posted a profit for the quarter of $1.05
billion, or 97 cents a share, down 5% from $1.11 billion, or $1.01
a share, a year earlier.
Revenue slipped 1.8% to $28.5 billion. Walgreens said it now
expects $4.90 to $5.20 in adjusted earnings per share for its new
fiscal year, compared with its previous guidance for $4.85 to $5.20
a share.
Walgreens shares fell 0.1% to $82.90 in morning trading.
Write to Sharon Terlep at sharon.terlep@wsj.com and Anne Steele
at Anne.Steele@wsj.com
(END) Dow Jones Newswires
January 05, 2017 12:18 ET (17:18 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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