Walgreens to buy Rite Aid

Published 9:26 am Thursday, October 29, 2015

According to reports from the Associated Press, Walgreens will buy rival Rite Aid for $9.41 billion in cash, creating a drugstore giant with nearly 18,000 stores around the world.
Both a Walgreens and Rite Aid are located in Elizabethton. Last year, Rite Aid in Elizabethton purchased the customer accounts of the Union Prescription Pharmacy when it closed its local store. They also agreed to give jobs to Union Prescription Pharmacy employees, who wished to stay with the company.
The deal combines the largest and third-largest U.S. drugstore chains, based on store counts. And it makes one of the world’s largest pharmaceutical buyers even bigger at a time when other key health care players like insurers and drugmakers also are expanding through multi-billion dollar deals.
Walgreens said it will pay $9 for each share of Rite Aid Corp. That’s a 48 percent premium to Rite Aid’s closing price of $6.08 Monday. Shares of both companies jumped Tuesday after The Wall Street Journal first reported the deal.
The companies said the deal is worth $17.2 billion, when debt is included.
Walgreens Boots Alliance Inc. has more than 13,100 stores around the world. Rite Aid, which is based in Camp Hill, Pennsylvania, has more than 4,600 stores in the U.S.
The companies expect the deal to close in the second half of next year, although given that it is combining the No. 1 and No. 3 players in its industry, it could draw close scrutiny from anti-trust regulators.
A combination with Rite Aid will give Walgreens additional purchasing power in negotiating prices with drug companies, a hot topic given the rapid rise in cost for some prescriptions.
Adding Rite Aid’s stores could also help Walgreens lower price for its customers because its growing volume of prescriptions would put it in a better position in talks with drug providers.
Rite Aid stores will initially keep its name after the deal closes, Walgreens said, but that may change over time.
Neither manager at the two local stores would comment on the sale. “We’ll just have to wait and see,” said a Rite Aid store employee.
All the major drugstore chains — Walgreens, CVS Health Corp., and Rite Aid — have been revamping their stores for the past few years to make them bigger providers of health care products and other services. They’re trying to appeal to customers who want to do more one-stop shopping and take advantage of the vast network of stores they have spent years building.
They also are shifting to serve the aging baby boom population and its health needs, as well as the growing number of people who are shopping around more for health care instead of simply visiting their family doctors.
Both Elizabethton stores this season have offered flu shots as well as pneumonia and shingles shots.

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