Walgreens Boots Alliance Inc's (NASDAQ: WBA)
proposed merger with Rite Aid Corporation (NYSE: RAD)
was unlikely to receive regulatory approval unless it took a series of actions, including divesting hundreds of properties.
Walgreens (the second-largest pharmacy chain) hoped to merge with Ride Aid (the third largest pharmacy chain) to overtake CVS
Health Corp (NYSE: CVS).
Walgreens and Rite Aid said they would sell hundreds of stores to appease regulators and showed a willingness to divest up to
1,000 units. The companies were said to have engaged in talks with private equity buyers and even approached rival CVS to buy some
of the units in cities it doesn't already operate.
Related Link: Investor Sentiment For
Walgreens Hitting New Lows
According to the New York
Post, Walgreens and Rite Aid were also talking with the grocery chain Kroger Co (NYSE: KR) to sell 650 units.
The New York Post said Kroger expressed interest in buying the retail locations and the size of the agreement could have been
large enough to appease regulators.
However, a source close to the situation told the New York Post that the Federal Trade Commission told the grocery chain that
the 650 stores can't be purchased and closed, with the operations moved inside the grocery stores.
"The FTC is trying to preserve the stand-alone stores," a source said. "But Kroger might want to integrate. What happens to Rite
Aids it buys that are near Krogers?"
If no solution is found, the FTC can sue the companies to block the proposed merger.
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