With the merger, the two companies would create arguably the most powerful drugstore chain in the country.
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But what will it mean for consumers? Here’s how the deal could affect shoppers.
A comparison of the two companies.
Walgreens Boots Alliance said it expected to finance the deal through “a combination of existing cash, assumption of existing Rite Aid debt and issuance of new debt”. He has said only that the company wanted to participate in what he saw as the inevitable consolidation of the long distribution chain that delivers drugs from manufacturers to patients in the U.S.
The global pharmacy giant said it is highly focused on building a differentiated in-store experience for health, wellness and beauty, and this combination will help accelerate Rite Aid’s own efforts toward that end.
Drug developers, the hospitals that write the prescriptions, the insurers that pay for them, the companies that act as the negotiating go-between and now pharmacies – operators in nearly every facet of the medical field are looking for deal partners in what’s been a record year for health-care M&A.
The Journal said a deal could be announced Wednesday.
Executive Vice Chairman and CEO Stefano Pessina said, “We are pleased with our progress and performance in the fourth quarter and in our first fiscal year since launching Walgreens Boots Alliance”.
Rite Aid didn’t immediately respond to a phone call seeking comment.
All this competition, plus the growing mail-order business for prescriptions, is expected to keep the pharmacy market fragmented even after this deal closes. The company’s strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. Instead, it gets a little of both through Rite Aid. I can understand the desire to merge to save on costs and use its combined size to negotiate better drug deals, but I don’t believe Walgreens truly understands what it’s getting itself into, or how much it may have overpaid for the right to deal with Rite Aid’s woes.
Pharmacy sales, which accounted for 67.4% of the division’s sales in the quarter, increased 6.6% from the year-ago quarter, while pharmacy sales in comparable stores climbed 10%.
Thrifty ice cream is made in El Monte.
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Speculations regarding a tie-up between Rite Aid and Walgreens have circulated for several years.
