Walgreens Ends $9.4 Billion Rite Aid Deal Outright, to Buy Some Rite Aid Stores -- Update
June 29 2017 - 8:09AM
Dow Jones News
By Anne Steele
Walgreens Boots Alliance Inc. and Rite Aid Corp. nixed their
$9.4 billion merger agreement, which had been heavily scrutinized
by antitrust regulators, and reached a new deal in which Walgreens
instead will buy half of Rite Aid's stores for $5.1 billion in
cash.
Investors had been awaiting a government decision on whether the
delayed tie-up between the drugstore chains would go through and
had grown increasingly uneasy that the deal could fall apart.
In a statement, Rite Aid said the decision to spike the previous
deal comes after it received feedback from the Federal Trade
Commission that the merger likely wouldn't have gotten government
approval.
Among the antitrust concerns was that the resulting drugstore
giant -- which would have challenged CVS Health Corp. -- would have
been able to bully pharmacy-benefit managers steering corporate and
government drug plans. The deal was announced in October 2015.
The new transaction terminates the previous deal, as well as
Rite Aid's agreement to sell some of its stores to Fred's Inc.
Walgreens will pay Rite Aid a $325 million termination fee. The new
deal represents about 48% of the 4,523 stores Rite Aid operated as
of the end of the first quarter.
Upon closing, Walgreens will start acquiring the Rite Aid
stores, three distribution centers and related inventory over a
six-month period. The stores eventually will be converted to the
Walgreens brand.
Walgreens Chief Executive Stefano Pessina said the company
believes the 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."
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
June 29, 2017 07:54 ET (11:54 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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