That’s fewer Rite Aid stores than it had sought to acquire, but the companies were forced to revise the deal a number of times to satisfy regulators. The FTC rejected WBA’s original proposal, in 2015, to buy all of Rite Aid, the nation’s third-largest retail pharmacy chain.
The deal the FTC finally OK’d preserves the nation’s three largest drug store chains as independent entities while making Walgreens the largest in terms of store count, with about 10,100 locations. CVS Health has about 9,700 stores and Rite Aid still has 2,600 outlets. Most of the stores WBA is buying are in the Northeast and the South, and will be converted to Walgreens stores.
WBA expects to wrap up the acquisition by spring. The company anticipates $300 million in annual savings over four years, through cost cuts and Walgreens’ enhanced ability to negotiate lower prices on drugs and other products.
“This is a significant moment for our company, and we are excited about the opportunities this agreement will deliver for our customers and patients, employees, and investors,” stated Stefano Pessina, WBA’s executive vice chairman and chief executive officer.
Though Rite Aid will lose nearly half of its stores, the retailer’s financial position should improve, according to an analysis from Zaks Investment Research. Proceeds from the sale will allow Rite Aid to pay off a portion of its debt, Zaks reported, and a smaller Rite Aid will have less exposure to unfavorable pharmacy reimbursement rates.