Walgreens Boots Alliance says it will close 600 stores as part of its deal to buy nearly 2,000 Rite Aid locations, with many of the shuttered sites belonging to Rite Aid.
The news emerged this week as Illinois-based Walgreens released its fourth quarter earnings report.
The closures are expected to begin in spring 2018, take 18 months to complete, and result in savings of $300 million per year by 2020, Walgreens said in a filing with the U.S. Securities and Exchange Commission.
The move will result over time in pre-tax charges of around $450 million, representing real estate, employee severance and other costs, the company added.
Walgreens isn’t saying which stores will close. The company did say some Walgreens locations will close as part of the move, but a key focus will be shutting down acquired Rite Aid stores within a mile of existing Walgreens locations, a corporate spokesman told the Associated Press.
The move shouldn’t have much impact in the midstate, where Rite Aid remains a dominant presence and only a few Walgreens stores are found in York and Lancaster Counties. In markets in other parts of the country, the overlap between chains is substantial.
Walgreens’ purchase of 1,932 Rite Aid stores and three distribution centers was announced on Sept. 19, nearly two years after the firms unveiled a full-scale merger proposal. The merger was dropped this summer amid long and intense scrutiny by the Federal Trade Commission.
The store-sale will leave Cumberland County-based Rite Aid with a reduced presence: down from 4,500 stores to about 2,600. With its headquarters in East Pennsboro Township, Rite Aid’s overall presence in Pennsylvania is expected to remain almost unchanged, down two locations, to 534.
Walgreens will buy the Rite Aid stores in phases, Forbes reported. Those sales began in the past week and will continue through next spring.
Rebranding those purchased stores will take three years and cost $750 million, Walgreens officials said.