It looks like after all this time of waiting for the Walgreens Boots Alliance and Rite Aid acquisition to be approved, that it just wont happen.
Walgreens and Rite Aid made a big announcement this week that Walgreens will now be buying just half of Rite Aid’s stores so that the deal can have regulatory clearance by the Federal Trade Commission.
The companies both announced on Thursday that Rite Aid will still be a “multi-regional” drugstore and 2,186 of its 4,500 stores will be sold to Walgreens. For the stores, “related distribution assets and inventory from Rite Aid,” Rite Aid will receive $5.175 billion in cash.
The companies said that most of the stores will be acquired in the “Northeast, Mid-Atlantic and Southeastern regions of the United States.
Walgreens CEO Stefano Pessina commented, “It will allow us to expand and optimize our retail pharmacy network in key markets in the U.S., including the Northeast, and provide customers and patients with greater access to convenient, affordable care. We believe this new transaction addresses competitive concerns previously raised with respect to the prior transaction.”
What does this mean for Fred’s pharmacy who was supposed to be a buyer of 865 Rite Aid stores? That merger is now terminated.
“While the acquisition of additional stores was an opportunity for growth, we always viewed it as a potential outcome that would accelerate our transformation, not define it,” Fred’s CEO Michael Bloom said in a statement.
“This is a disappointing outcome; however, the termination of the transaction has no impact on the Company’s transformation strategy or our ability to execute.”
Disclaimer: We have no position in Walgreens Boots Rg (NASDAQ: WBA), Rite Aid Corporation (NYSE: RAD), nor Fred’s, Inc. (NASDAQ: FRED) and have not been compensated for this article.