Walgreens/Rite Aid Deal Nearing End: Reports

The deal between Walgreens Boots Alliance and Rite Aid looks like it may close by the end of the year, according to published reports.

As part of the mandated divesture of stores to ease antitrust concerns regarding Deerfield, Ill.-based Walgreens' $9.4 billion acquisition of Rite Aid, sources reported that Fred’s and The Kroger Co. will take a “substantial” number of locations, as will two or more private equity firms.

Memphis, Tenn.-based Fred’s –  which operates 650-plus discount general merchandise stores, including 19 franchised locations, primarily in the Southeastern United States – sparked heightened interest in the investor community when its management suggested a “pending transaction” was in the works, while speculation has centered widely on Cincinnati-based Kroger's acquiring hundreds of sites from the drug store chains, which revealed their intention to unite in late October 2015.

As PG previously reported, Walgreens' acquisition of Camp Hill, Pa.-based Rite Aid, valued at approximately $17.2 billion, including acquired net debt, would fuse the nation's largest and third-largest drug store chains. The total number of stores controlled by Walgreens could increase to more than 12,000, and would give the combined company increased negotiating power with drugmakers and suppliers.  

Walgreens said it expects to "realize synergies from the acquisition in excess of $1 billion" within four years of closing, by reducing operational and other costs.