Walgreens gets OK for scaled-down Rite Aid deal
The magic number: 1,932.
That's how many Rite Aid Corp. stores Walgreens Boots Alliance Inc. will purchase under a $4.375 billion deal that has secured federal regulatory approval, the Illinois-based pharmacy giant announced Tuesday morning.
It represents a cut from the 2,186-store purchase plan originally announced in June, a plan that followed Walgreens' unsuccessful bid to acquire Rite Aid outright.
The amended deal stems from discussions between Rite Aid, Walgreens Boots Alliance and the Federal Trade Commission. It has been approved by both companies' boards, but does not require a shareholder vote, Rite Aid officials said.
Store purchases are expected to begin in October, with completion anticipated in spring 2018, company officials said.
The stores to be purchased are located primarily in the Northeast and Southern U.S., Walgreens officials said. The deal also includes the three distribution centers, in Philadelphia, Dayville, Conn., and Spartanburg, S.C.
A Walgreens spokesman told the Business Journal Tuesday morning that the company is not yet releasing a list of store locations involved in the deal, and was not sure when one would be made available.
The purchased stores will "be converted to the Walgreens brand in carefully planned phases over time," the company said, while transition of the distribution centers to the Walgreens brand will not begin "for at least 12 months."
Based in East Pennsboro Township, Cumberland County, Rite Aid currently operates more than 4,500 stores in 31 states and the District of Columbia.
After the transaction is complete, Rite Aid will continue to operate approximately 2,600 stores and six distribution centers as well as EnvisionRx, its pharmacy benefit manager, RediClinic and Health Dialog.
"With a compelling and more profitable store footprint in key markets, enhanced purchasing capabilities and a stronger balance sheet and improved financial flexibility, we are well positioned to implement our plans to deliver improved results," Rite Aid chairman and CEO John Standley said.
His counterpart expressed similar optimism.
"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 Boots Alliance executive vice chairman and CEO Stefano Pessina said.