Walgreens scraps Rite Aid merger

Publish Date: June 29, 2017

Walgreens

Walgreens Boots Alliance Inc. has cancelled plans to acquire Rite Aid Corp., and will instead buy half the latter’s stores — amounting to 2,186 units — and three distribution centers, for $5.175 billion. Walgreens says it has also scrapped a deal to sell 865 Rite Aid stores to Fred’s Inc.

Walgreens first announced plans to acquire Rite Aid in October 2015, and subsequently agreed to sell some of the stores to Fred’s in an attempt to ease regulatory concerns about a merger between the drug store chains. But issues over competition persisted nevertheless. Walgreens has over 8,000 stores across the U.S., while Rite Aid operates nearly 4,600 units. Both retailers have a major presence in California, Massachusetts and New York.

Under the cancellation agreement, Walgreens will pay Rite Aid a $325 million termination fee. The stores it acquires will come under the Walgreens brand “over time,” according to a company statement.

“We believe this 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,” said Walgreens Boots Alliance Executive Vice Chairman and CEO Stefano Pessina, in the company statement.


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