After a long, unsuccessful struggle to merge, Walgreens Boots Alliance
Inc (NASDAQ: WBA) announced Tuesday that it secured
regulatory clearance to purchase 1,932 stores, three distribution centers and associated inventory from Rite Aid
Corporation (NYSE: RAD).
The new $4.375 billion transaction, amended from an earlier agreement
of $5.175 billion for 2,186 stores, is expected to generate annual synergies over $300 million within four years.
“Combining Walgreens retail pharmacy network with a strong portfolio of Rite Aid locations is expected to help us achieve
enhanced,
sustainable growth while enabling us to broaden our reach and provide greater access to convenient, affordable care in more
local neighborhoods across the United States,” Stefano Pessina, Walgreens executive vice chairman and CEO, said in a press release.
The terms include Walgreens’ seizure of real estate leases and the option for Rite Aid to join Walgreens Boots Alliance
Development GmbH.
The boards of both parties have approved the deal, and Walgreens will begin purchasing assets in October. Individual stores,
located primarily in the South and Northeast, will phase slowly into the Walgreens brand, while the distribution centers in
Connecticut, Pennsylvania and South Carolina will transition no sooner than fall 2018.
Based on this timeline, Walgreens does not anticipate meaningful impact on earnings per share in the 2018 fiscal year.
At time of publication, shares of Rite Aid were down 5.49 percent at $2.58. Shares of Walgreens were down 1.71 percent at
$81.19.
Related Links:
Fred's Is Big
Loser In Rite Aid-Walgreens Deal
Rite
Aid-Walgreens Deal Produces A Winner: Core-Mark
Partisan
Politics May Be To Blame For Hold Up In Walgreens-Rite Aid Deal
__________
Image Credit: By ProducerMatthew - Own work, CC BY-SA 3.0, via Wikimedia Commons
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.