Walgreens to buy Rite Aid in $17.2 billion deal
The cost savings of a merger could aid both pharmacies to negotiate against rising drug prices.
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Walgreens will buy Rite Aid in a deal worth $17.2 billion, the company announced Wednesday.
Walgreens Boots Alliance is acquiring all outstanding shares of Rite Aid at $9 a share, in a cash deal of $9.4 billion, and a total of $17.2 billion with acquired net debt, according to the company.
The deal unites two of the nation's four largest drugstore chains, in a field that also includes CVS and Wal-Mart.
"Today's announcement is another step in Walgreens Boots Alliance's global development and continues our profitable growth strategy. In both mature and newer markets across the world, our approach is to advance and broaden the delivery of retail health, wellbeing and beauty products and services," said Walgreens Boots Alliance Executive Vice Chairman and CEO Stefano Pessina.
The cost savings of a merger could aid both pharmacies to negotiate against rising drug prices.
The news comes amid many mergers of healthcare providers and proposed deals to combine large insurance companies: Aetna with Humana for $34 billion and Anthem's proposed acquisition of Cigna for $48 billion.
Regulars need to decide whether the mergers violate anti-trust provisions and approve the consolidations.
[Also: Tracking 2015 mergers and acquisitions]
News on Tuesday of the potential Walgreens deal caused Rite Aid's shares to rise by 40 percent in trading, according to published reports.
Rite Aid, in Camp Hill, Pa., has about 4,600 drugstores in 31 states. Walgreens has more than 13,200 stores in 11 countries, according to the Wall Street Journal.
Rite Aid has worked to expand its RediClinics, walk-in health centers, while Walgreens has aggressively expanded its walk-in clinic business.
Rite Aid a market value of more than $6 billion, according to the Wall Street Journal, but a takeover deal could value the company at close to $10 billion. That doesn't include its hefty debt load, which totaled $7.4 billion in August, the report said.
Rite Aid had revenue of $26.5 billion last year, compared to Walgreens which had revenue $76.4 billion.
Twitter: @SusanJMorse
