It’s one of those transactions that was a matter of when, not if. The deal is worth $17.2bn when debt is included, the companies said.
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The tectonic shift in the market comes as pharmacies are grappling with the rapidly changing health-care industry, seeking additional negotiating leverage against drug companies and increasingly offering clinical services.
They also act as pharmacy benefit managers, the powerful middlemen between insurers, hospitals, drugmakers and patients in managing the distribution of drugs. Rite Aid would operate under its own brand name as a wholly owned subsidiary of Walgreens. Rite-Aid could potentially be valued at about $10 billion, based on standard takeover premiums; it was valued at $6 billion on Monday before rumors of the deal leaked.
The Rite Aid store at 842 State St., meanwhile, is less than a mile west of the Walgreens at 1655 State St. The manager of Rite Aid store declined to comment.
Rite Aid’s strong presence in the Northeast and Mid-Atlantic may be enticing to Walgreens, Edwards Jones analyst Boylan said. But on Tuesday, Rite Aid got its biggest jolt ever, rising more than 40 percent. Once the acquisition closes, Walgreens Boots Alliance plans to further transform Rite Aid’s stores to better meet consumer needs.
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This is all about cost savings. The stock had slumped 29% since September 16 after the company lowered profit and revenue forecasts for the year, giving Walgreens a potential opportunity to make an offer. “Finally, this combination will generate a stronger base for sustainable growth and investment into Rite Aid stores, while realizing synergies over time”. The investigation relates to whether the proposal is fair to the public shareholders of Rite Aid and whether Rite Aid’s Board breached its fiduciary duties in connection with the proposed sale.
