Under the terms of the friendly deal, Walgreens is offering to pay $9-a-share in cash, a 48 per cent premium to Rite-Aid’s Monday closing price.
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CVS, too, has broadened its reach through acquiring its rivals, announcing plans in June to acquire Targets’ pharmacies and clinics in a $1.9 billion deal.
“This combination will generate a stronger base for sustainable growth and investment into Rite Aid stores, while realizing synergies over time”, Pessina said in a recent statement.
The Wall Street Journal first reported news of the deal.
Transition: Rite Aid will be a wholly-owned subsidiary of Walgreens Boots Alliance, expected to initially operate under its existing brand name.
News of the potential Walgreens deal caused Rite Aid’s shares to rise by 40 percent in trading on Tuesday, according to published reports. That combination created Walgreens Boots Alliance Inc., which runs more than 13,200 stores and 350 distribution centers in 11 countries.
This year, Rite Aid acquired a small pharmacy benefits manager, which acts as a kind of middleman by processing prescriptions for insurers and negotiating prices with drugstores and pharmaceutical companies.
When contact, East Pennsboro Township officials said they weren’t aware of Deerfield, Illinois-based Walgreens’ deal with Rite Aid.
Walgreens Boots Alliance was created a year ago when Alliance Boots merged with the USA drugstore Walgreens.
A Walgreens-Rite Aid deal would need approval from the U.S. Federal Trade Commission, which studies retail mergers to ensure they comply with antitrust law.
If it goes through, combining with Rite Aid would give Walgreens additional purchasing power to negotiate prices with drug companies – a major topic in the U.S. after a rapid rise in the cost of a few prescriptions.
For its fiscal fourth quarter ended August 31, Walgreens said US pharmacy sales at stores open at least a year grew 10%. On a comp-sales basis, pharmacy same-store sales increased 4.6% for the year, while front-end comps grew a more modest 1.5%, which the company attributed to “an increase in basket size partially offset by lower customer traffic”.
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Image: Rite Aid chain bought by Walgreens.
