Walgreens Kills Deal to Acquire Rite Aid

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Walgreens Kills Deal to Acquire Rite Aid

06/29/2017

Walgreens Boots Alliance decided to shift gears and announce it will not acquire Rite Aid in a troubled deal that has been languishing for nearly two years. Instead it will buy nearly half of Rite Aid's stores (2,186)  making it the largest pharmacy chain in the country by store count just ahead of CVS.

Today's news appears motivated by U.S. regulators raising anti-trust concerns about the original plan, which would have reduced the number of large, national pharmacy chains from three to two. Regulators feared the merger may have led to anti-competitive measures taken by the two dominant players in such areas as prices, which would impair consumers.  

Today's news brings to a close the Walgreens and Rite Aid merger, which was originally announced in October 2015 and later revised after U.S. officials raised concerns. 

Walgreens announced it would pay $5.2 billion for the 2,186 Rite Aid stores plus three distribution centers and inventory in those locations. Most of the acquired store locations are located in the Northeast, Mid-Atlantic and southeastern states.

This is the latest move in an ongoing battle between Walgreens and arch rival CVS for dominance in the pharmacy segment of retail. Although Walgreens did not get all it wanted from the original deal, the fallback plan still improves its position through the acquisition of more than 2,000 store locations that will extend the Walgreens brand and reach deeper into the marketplace.