Walgreens to Acquire Rite Aid for $17.2 Billion

In a deal that will unite the nation's largest and third-largest drugstore chains, Deerfield, Ill.-based Walgreens Boots Alliance Inc. will acquire Camp Hill, Pa.-based Rite Aid Corp for $9 per share in cash for a deal valued at approximately $17.2 billion, including acquired net debt.

The boards of directors of both companies have approved the transaction, which is subject to approval by Rite Aid's common stockholders, applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other customary closing conditions.

After the acquisition closes in the second half of calendar 2016, Walgreens plans to further transform Rite Aid's stores to better meet consumer needs. 

"Today's announcement is another step in Walgreens Boots Alliance's global development and continues our profitable growth strategy," Walgreens' Executive Vice Chairman and CEO Stefano Pessina said in a statement. Noting that the combination "will further strengthen our commitment to making quality healthcare accessible to more customers and patients," Pessina noted the competing drug chain's "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."

Pessina further cited Walgreen's "global expertise and resources to accelerate the delivery of integrated frontline care [and] innovative solutions for providers, payers and other entities in the U.S. healthcare system" with a combination which "will generate a stronger base for sustainable growth and investment into Rite Aid stores [and] synergies over time." 

Rite Aid Chairman and CEO John Standley described the transaction as "a testament to the hard work of all our associates to deliver a higher level of care to the patients and communities we serve. Together with Walgreens Boots Alliance, the Rite Aid team can continue to build upon this great work through access to increased capital that will enhance our store base and expand opportunities as part of the first global pharmacy-led, health and wellbeing enterprise." 

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 until the integration process of its stores and infrastructure is complete. 

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.

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