Walgreens Boots Alliance Snatches Up Rite Aid for $17.2B

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Walgreens Boots Alliance Snatches Up Rite Aid for $17.2B

By Jamie Grill-Goodman - 10/29/2015
Drugstore Chain Walgreens Boots Alliance, Inc. will acquire competitor chain Rite Aid Corporation for a total enterprise value of approximately $17.2 billion.
Walgreens Boots Alliance 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 across its approximately 4,600 stores in 31 states and the District of Columbia.Upon completion of the merger, Rite Aid will be a wholly owned subsidiary of Walgreens Boots Alliance, and is expected to initially operate under its existing brand name. 

The acquisition also underscores Walgreens Boots Alliance’s global approach to growth opportunities. Walgreens Boots Alliance recently reported its adjusted net earnings for fiscal year 2015 increased 28.9 percent to $4.1 billion compared with the same period a year ago. 

Walgreens will pay $9.00 per share in cash for U.S. retail pharmacy chain Rite Aid. The purchase price represents a premium of 48 percent to the closing price per share on 26 October 2015, the day before the agreement was signed.

Once the acquisition closes, Walgreens Boots Alliance plans to further transform Rite Aid’s stores to better meet consumer needs.

“This combination will further strengthen our commitment to making quality healthcare accessible to more customers and patients," said Walgreens Boots Alliance Executive Vice Chairman and CEO Stefano Pessina. "Our complementary retail pharmacy footprints in the U.S. will create an even better network, with more health and wellness solutions available in stores and online. Walgreens Boots Alliance will provide to Rite Aid its global expertise and resources to accelerate the delivery of integrated frontline care, and to offer innovative solutions for providers, payers and other entities in the U.S. healthcare system. Finally, this combination will generate a stronger base for sustainable growth and investment into Rite Aid stores, while realizing synergies over time.”

“Joining together with Walgreens Boots Alliance will enhance our ability to meet the health and wellness needs of Rite Aid’s customers while also delivering significant value to our shareholders,” said Rite Aid Chairman and CEO John Standley. “This transaction is a testament to the hard work of all our associates to deliver a higher level of care to the patients and communities we serve."

The boards of directors of both companies have approved the transaction, which is subject to approval by the holders of Rite Aid’s common stock, the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions. The transaction is expected to close in the second half of calendar 2016.

The transaction is expected to be accretive to Walgreens Boots Alliance’s adjusted earnings per share in its first full year after completion. Additionally, Walgreens Boots Alliance expects to realize synergies in excess of $1 billion.
Upon completion of the merger, Rite Aid will be a wholly owned subsidiary of

Working together, decisions will be made over time regarding the integration of the two companies, ultimately creating a fully harmonized portfolio of stores and infrastructure.

Walgreens Boots Alliance expects to finance the transaction through a combination of existing cash, assumption of existing Rite Aid debt and issuance of new debt.

Citi acted as Rite Aid’s exclusive financial adviser, with Skadden, Arps, Slate, Meagher & Flom LLP acting as its legal counsel on transaction legal matters and Jones Day acting as its legal counsel on antitrust regulatory matters.
UBS Investment Bank acted as Walgreens Boots Alliance’s financial adviser and provided a fairness opinion to the board of directors of Walgreens Boots Alliance, with Simpson Thacher & Bartlett LLP acting as its legal counsel on transaction legal matters and Weil, Gotshal & Manges LLP acting as its legal counsel on antitrust regulatory matters. UBS Investment Bank will be the sole arranger on the bridge financing to Walgreens Boots Alliance.