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Revised deal brings 1,932 stores to Walgreens Boots Alliance
It took four tries and two years, but the acquisition of part of Rite Aid will now proceed, with a substantial number of stores retained by Rite Aid. WBA will wind up with just over 10,000 stores (and three distribution centers) and Rite Aid will have approximately 2,600 stores, six distribution centers, the EnvisionRx pharmacy benefit manager, RediClinic walk-in clinics, and Health Dialog, a health-management company. Rite Aid also garners an option to purchase generic drugs through a WBA subsidiary for up to 10 years.
The final deal, announced Sept. 19, dropped 254 stores from the revised deal announced in June, when the formal acquisition of Rite-Aid ended, along with a side deal to sell a portion of the Rite-Aid stores to Fred’s Pharmacy, a regional company, to meet antitrust concerns.
WBA is paying Aid $4.375 billion for the 1,932 stores—down from the $5.175 billion for 2,186 stores that was announced in June, and down further from the $9.4 billion to acquire Rite Aid outright in 2015. The 2015 bid elicited objections from the Federal Trade Commission, which WBA was prepared to meet by offering to sell some of the stores it wanted to buy. A revised bid in 2016 had WBA paying $7.4 billion for all but 1,200 stores (which would have been sold to Fred’s). Instead, the deal now is primarily a transfer of 43% of Rite Aid stores.
In an interview with Bloomberg Television, Stefano Pessina, CEO of WBA, was asked whether WBA would be looking to buy additional pharmacies, given that the company will still have a relatively small presence in the western US., “We don’t need thousands (more) stores, but we do need hundreds,” he answered.