Walgreens Boots Alliance to Buy Rite Aid for $17.2 Billion

Now’s the time to pick up Walgreens Boots Alliance shares, while the company’s valuation still trades roughly in line with its peers and before regulators give their expected stamp of approval to the proposed merger.

Rite Aid shares jumped more than 40 percent Tuesday.

This guidance assumes no material accretion from the agreement to acquire Rite Aid, which is expected to close in the second half of calendar 2016.

Europe, Walgreens Boots Alliance is charging ahead with a new US acquisition despite being in the middle of a massive restructuring. Management took numbers that they previously used to say how well Rite Aid was performing toward long-term goals and then twisted these numbers around to support selling Rite Aid at a low price to Walgreens. Walgreens and CVS both have market capitalizations in excess of $100 billion, where the much smaller Rite Aid had revenues of $26.5 billion at the end of their fiscal year in February. That would catapult the merged company above CVS, which has 7,800 stores.

The deal comes less than a year after Walgreens bought European health and beauty retailer Alliance Boots.

Walgreens, meanwhile, has two drugstores in Watertown and locations in Potsdam, Massena and Malone. “That’s almost 20 percent of the brick and mortar pharmacies in the U.S”. On a brighter note, the company made substantial progress in its strategic cost reduction initiative as is evident from the accelerated rate of store closure during the reported quarter. That combination created Walgreens Boots Alliance Inc., which runs more than 13,200 stores and 350 distribution centers in 11 countries.

Analysts and anti-trust lawyers said the deal would pass regulatory muster but would require divestments of stores, especially in northeastern United States, where Walgreens and Rite Aid stores overlap by more than 25 percent.

Rite Aid would operate under its own brand name as a wholly owned subsidiary of Walgreens.

CBS Los Angeles asked a Walgreens spokesman about the fate of Rite Aid’s signature ice cream.